Banks initiated the fewest number of foreclosures since 2007 last quarter, according to new figures from the Mortgage Bankers Associations. But don't be too quick to don the rose-colored glasses: The number of loans in foreclosure remains stubbornly high at 4.4%—down only a hair from last year's 4.5%, in part because some states require courts to oversee foreclosures, drawing out the process.
While the numbers are still disturbingly, historically high, signs of improvement emerge when you factor in past-due loans: 11.8% of all loans are at least 30 days past due or already in foreclosure; last year, that number was 12.8%, and two years ago it was 14.7%, the Wall Street Journal reports. The drop is due almost entirely to a decline in new homeowners who are late on their payments, indicating that households are stabilizing financially. "The drops we continue to see are the best news out of this," says the MBA's chief economist. "It indicates the speed with which we're working through the backlog."