WASHINGTON — The end of the foreclosure crisis is finally in sight. For the first time in almost three years, the number of homeowners falling behind on their loans is declining.
The drop means the number of people losing their homes will start to fall. But some pain from the crisis is sure to persist.
Because millions of people are already in foreclosure, deeply discounted houses will put pressure on home prices for years.
"Housing is on a path to recovery," said Mike Larson, a real estate analyst with Weiss Research. "It's going to be a very long, gradual process."
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In high-foreclosure cities such as Las Vegas, Phoenix and Miami, homes have lost roughly half their values from their peaks. But a report Friday from the Mortgage Bankers Association showed Nevada, Arizona and Florida had some of the biggest declines in new delinquencies.
The figures probably mark "the beginning of the end" of the crisis, said Jay Brinkmann, the trade group's chief economist.
However, more than 15 percent of homeowners with a mortgage have missed at least one payment or are in foreclosure, a record.
Worse, nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of less than 20 percent.
"The bad news is that we still have a big problem," Brinkmann said. "The good news is it looks like it may not get much bigger."
That's because the percentage of borrowers who missed just one payment on their home loans fell to 3.6 percent in the October-to-December quarter from 3.8 percent in the third quarter, according to the Mortgage Bankers Association.
That decline was even more surprising because delinquencies usually rise at that time of year due to higher heating bills and holiday spending.
In another encouraging sign, the number of borrowers who had missed at least one payment but were not yet in foreclosure also fell for the first time since the beginning of 2007.
Banks are delaying the foreclosure process, traditionally between four and six months, as they evaluate borrowers for help under the Obama administration's $75 billion mortgage-relief effort. It lowers borrowers payments to as low as 2 percent for five years and extends loan terms to as long as 40 years.
But experts warn that hundreds of thousands of borrowers will not be eligible or will not complete the process. So far, only 116,300 borrowers out of 1 million who enrolled have had the terms of their mortgages changed permanently.
Despite the government's efforts, there may be 6 million foreclosed homes that are put on the market over the next three years, according to Barclays Capital.
Timing is key. If banks unload them suddenly, "it will be much more detrimental to the housing recovery than if it's a slow, gradual bleed," said Michelle Meyer, a Barclays economist.
On Friday, Obama announced housing agencies in the five hardest-hit states of Arizona, California, Florida, Michigan and Nevada will receive $1.5 billion in financial rescue money.
It will go to local programs to help unemployed homeowners, "underwater" borrowers who owe more than their home is worth, or to give lenders incentives to assist borrowers with second mortgages.
The programs will need to be approved by the Treasury Department.
"Government alone can't solve this problem," Obama said. "But government can make a difference."
In a briefing with reporters, administration officials acknowledged that the effort was just a small one. But they said it could help develop broader national solutions.
"What we're trying to do here is foster innovation," said Herbert Allison, an assistant Treasury secretary.