DEFINITION of '60-Plus Delinquencies'
Home loans that are more than 60 days past due on their monthly mortgage payments. 60-plus delinquency rates are typically expressed as a percentage of a group of loans written within a specified time period, such as a given calendar year. Another common grouping method are the interest rates for the pool of loans that make up a mortgage-backed security (MBS) or other securitized mortgage product.
60-plus delinquencies are less than 90 days past due, and have not yet entered the foreclosure process - loan in the latter status are expressed separately. The 60-plus rate may be split into one for prime loans and subprime loans. The 60-plus rate on subprime loans can be expected to be higher than for prime. Also, 60-plus rates are often published separately for fixed-rate versus adjustable-rate loans.
BREAKING DOWN '60-Plus Delinquencies'
The 60-plus rate is often added to another negative event measure, the foreclosure rate for the same group of loans. The two added together give a cumulative measure of the individual mortgages that are either not being paid at all, or being paid behind schedule.
If the rate on past-due and/or foreclosed mortgages rises beyond a certain level, the mortgage-backed security may have a shortfall of cash to pay out to investors. This can cause massive re-pricing of assets, resulting in some investors losing the majority of their invested capital.