Chart of the Week: Delinquencies Still High

This chart from Calculated Risk show mortgage delinquencies declining in most states but the total number of deliquencies and foreclosures still exceeds the pre-crisis (Q1,2007) level:

Some commentators conclude that banks are deliberately not foreclosing on loans to prevent over-saturation of the housing market since distress sales depress the market value of their collateral. Banks' collateral value has plunged 32% since the real estate bubble burst in 2006. Maricopa County (Phoenix) in Arizona is held up as an example of a rebounding real estate market, but foreclosure starts (notice of default) fell 14.9% between May and June 2012 and recorded trustee deeds (completed foreclosures) were down 56% from June 2011. Analysts think the banks are looking for the "sweet spot" of market manipulation where REO inventory can be disposed without crashing the value of their collateral. What's that you say? Crude manipulation of a free market? That's capitalism in the 21st Century.