What does 'Delinquent' mean

Delinquent describes something or someone that fails to accomplish what is required by law or duty, such as the failure to make a required payment or perform a certain action. A delinquent is an individual or corporation with a contractual obligation to make payments against a loan in a timely manner, such as through a mortgage, but payments are not made on time. In the case of a mortgage, the lender can initialize foreclosure proceedings if the mortgage is not brought up to date within a certain amount of time.

BREAKING DOWN 'Delinquent'

The term "delinquent" commonly refers to a situation where a borrower is late or overdue on a payment, such as income taxes, a mortgage, an automobile loan or a credit card account. There are consequences for being delinquent, depending on the type, duration and cause of the delinquency. People who are late with a credit card payment may be forced to pay a late fee. "Delinquent" also refers to the failure to perform a duty or act in a manner expected of a person in a particular profession or situation. For example, a police officer who does not act in a manner to fulfill his duty to protect could be found delinquent.

Delinquent vs. Default

In a financial sense, delinquency occurs as soon as a borrower misses a payment. This differs from a loan default, which occurs when a borrower fails to repay the loan as specified in the original contract. Most creditors allow a loan to remain delinquent for a period of time before considering it as default; the duration depends on the creditor and loan type. The U.S. federal government allows student debt to be delinquent for 270 days before declaring it to be in default.

Current and Historical Delinquency Rates

As of the fourth fiscal quarter of 2016, delinquency rates in the U.S. banking sector as a whole were 4.15% on residential real estate loans, 0.85% on commercial real estate loans and 2.15% on consumer credit card loans. Delinquency rates on total U.S. loans and leases sold by banks in 2016 was 2.04%, bringing delinquency rates closer to their historical average following the mortgage crisis of 2007 and subsequent financial crash. Delinquency rates reached a Great Recession-high of 7.4% in the first quarter of 2010 (11.26% delinquency rate on residential real estate loans). Before the second quarter of 2008, delinquency rates on total U.S. loans and leases sold by banks hadn't exceeded 3% since the first quarter of 1994.

RELATED TERMS
  1. Delinquency Rate

    The percentage of loans within a loan portfolio that have delinquent ...
  2. Delinquent Account

    A credit card balance on which a consumer has failed to make ...
  3. Mortgage Bankers Association's ...

    A voluntary survey of over 120 mortgage lenders, including mortgage ...
  4. Roll Rate

    The percentage of credit card users who become increasingly delinquent ...
  5. Delinquent Mortgage

    A mortgage for which the borrower has failed to make payments ...
  6. Credit Control

    A strategy employed by manufacturers and retailers to promote ...
Related Articles
  1. Personal Finance

    How Credit Card Delinquency Works

    The more you understand about delinquency, the better prepared you'll be to handle it.
  2. Taxes

    How Credit Card Delinquency Works

    When you pay less than the minimum monthly payment on your credit cards, you become delinquent.
  3. Insights

    Auto Delinquency Rates Near 2008 Highs

    Auto delinquency rates edge close to the peak reached during the height of the financial crisis, fueling speculation that subprime lending is rife again.
  4. Investing

    Value of Subprime Credit Card Debt in Debate

    Many banks are easing out of subprime credit card debt while other financial institutions see opportunity.
  5. Investing

    Home Equity Loan Delinquencies Are Rising (BAC, JPM)

    More borrowers are starting to default on their home equity loans and banks are starting to feel the strain.
  6. Investing

    The Commercial Mortgage Story Gets Better For Investors

    Things are looking up for loans tied to commercial real estate mortgages. Delinquencies continue to drop, while refinancing opportunities have lowered debt-service coverage ratios. All in all, ...
  7. Investing

    Commercial Real Estate Faces Strong Headwinds

    The good times may be coming to an end for the U.S. commercial real estate market as mortgage defaults rise and interest rates move upward.
  8. Personal Finance

    Subprime Auto Delinquency Rates on the Rise (NICK, CPSS)

    Fitch Ratings reports that delinquency rates for auto loans are nearing 2008 crisis level. What's driving the surge of default? Subprime loans, of course.
  9. Insights

    Subprime Debacle: Lenders See Rising Losses (SC)

    The delinquency rate on auto loans has increased every month since February, a sign that rising losses may be ahead
  10. Investing

    The Next Big Short: Subprime Auto (NICK)

    Economists are increasingly concerned about the subprime loan industry. But this $1.1 trillion bubble has nothing to do with housing.
RELATED FAQS
  1. What are the long-term effects of delinquent accounts?

    Find out more about loan delinquency, loan defaults and the long-term consequences of borrowers who are delinquent on their ... Read Answer >>
  2. What are the differences between delinquency and default?

    Find out more about loan delinquency, loan default, and the difference between a loan borrower defaulting and being delinquent ... Read Answer >>
  3. What is the difference between student loan default and delinquency?

    Learn the differences between simply becoming delinquent on your student loans vs. actually defaulting on your student loan ... Read Answer >>
  4. Can a creditor sue me for a delinquent account?

    Learn what happens when an account is delinquent and read about the regulations that protect consumers who have delinquent ... Read Answer >>
  5. How does a decline in housing prices affect the banking sector?

    Learn about the affects on banks when housing prices go down, including loan delinquency rates, mortgage foreclosures, and ... Read Answer >>
Hot Definitions
  1. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying ...
  2. Expense Ratio

    A measure of what it costs an investment company to operate a mutual fund. An expense ratio is determined through an annual ...
  3. Mezzanine Financing

    A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. Mezzanine financing ...
  4. Long Run

    A period of time in which all factors of production and costs are variable. In the long run, firms are able to adjust all ...
  5. Quasi Contract

    A legal agreement created by the courts between two parties who did not have a previous obligation to each other. A normal ...
  6. Wage-Price Spiral

    A macroeconomic theory to explain the cause-and-effect relationship between rising wages and rising prices, or inflation. ...
Trading Center