Mortgage cure rates have fallen off a cliff. For those unfamiliar with the term, a "cure rate" pertains to those who go delinquent on loans then catch up and become current. Late payments that don't "cure" have a tendency to get later and later over time, before they eventually default.



Fitch ratings notes Cure Rates Plunge Among Prime RMBS.



According to Fitch, cure rate on prime mortgages plunged to 6.6% from an average 45% during 2000-2006. Alt-A cure rates plunged to 4.3% from an average 30.2% and subprime cure rates fell to 5.% from an average 19.4%.



A couple of charts can help put this in context. Here is a chart from Hidden Backlog of Foreclosures.



Pent Up Foreclosures By State







click on chart for sharper image



In regards to the above chart I said.



The area in pink represents potential foreclosure demand. Not all of that area will be foreclosed, but some of it sure will. The " Hidden Backlog " mentioned above (and highlighted in red) is within that pink area.



One thing missing from the chart is pent-up demand from those who are not delinquent yet have a huge incentive to walk because of massive negative equity.



For a look at "negative equity", moratoriums, and other foreclosure issues please see Brace for a Wave of Foreclosures, the Dam is About to Break.

Prime Delinquencies and Foreclosures