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. Mortgage Bankers Association's ...

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

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

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

    A strategy employed by manufacturers and retailers to promote ...
  6. Straight-Roller

    A credit card account which is increasingly delinquent, and in ...
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. Personal Finance

    OCC Warns Auto Loan Market Speeding Toward Trouble

    Auto loan lenders may face trouble with the OCC warning of delinquencies and defaults.
  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. 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.
  9. Personal Finance

    Americans Are Borrowing More To Buy Cars - But Should They Be?

    As the economy slowly heals, credit has become easier to obtain and interest rates have gone down. But does that mean it's wise to take on a car loan right now?
  10. Personal Finance

    What New Student Loan Repayment Options Mean

    American college graduates are facing an increasing amount of student loan debt. There are new rules for repaying that debt. Here's what you need to know.
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 Sallie Mae report you to a credit bureau?

    Understand how, when and why student loan lenders such as Sallie Mae can report delinquent or defaulted borrowers to a credit ... 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. Fintech

    Fintech is a portmanteau of financial technology that describes an emerging financial services sector in the 21st century.
  2. Ex-Dividend

    A classification of trading shares when a declared dividend belongs to the seller rather than the buyer. A stock will be ...
  3. Debt Security

    Any debt instrument that can be bought or sold between two parties and has basic terms defined, such as notional amount (amount ...
  4. Taxable Income

    Taxable income is described as gross income or adjusted gross income minus any deductions, exemptions or other adjustments ...
  5. Chartered Financial Analyst - CFA

    A professional designation given by the CFA Institute (formerly AIMR) that measures the competence and integrity of financial ...
  6. Initial Coin Offering (ICO)

    An Initial Coin Offering (ICO) is an unregulated means by which funds are raised for a new cryptocurrency venture.
Trading Center