It was reported today by the Mortgage Bankers Association that fewer Americans are falling behind on their mortgage payments. This has nothing to do with the foreclosure “robo-signing” mess, because the number they were looking at was the first indication of a potential foreclosure, the number of borrowers that had a single payment past due. This means that less and less people are falling behind on their mortgage payments.

It was speculated that there are two reasons for this. Less people filing for unemployment, although that number did go up today; and improved underwriting of mortgages over the past few years. The improved under-writing was a direct result of a change in modus-operandi of the lenders following the mortgage melt-down.

Ok so let’s speculate and assume this is a signal of some part of a recovery. Many of the other pressures on the housing market remain with the largest being bank-owned property. The delay in foreclosures may have the biggest impact on the housing recovery. There is still a large amount of foreclosures that have to move through the system; in fact CNBC reported that the percent of loans in foreclosure is 4.63% tying the record high for that segment of the loan population. Most foreclosures once they are started continue until they are completed. The result will be more bank-owned inventory for sale to compete with. So in the short-term the pressures of the foreclosure inventory will most likely extend the current market conditions. However, with less mortgages going bad maybe that inventory will begin to diminish and we can all return to whatever normal has become. Let the Recovery begin.