Ever since banks began revamping their foreclosure procedures last fall, tracking foreclosure activity has provided little insight into the state of the American homeowner. Banks are increasing their shadow foreclosure inventory while decreasing the number of actual foreclosures that occur, skewing the numbers. Luckily, there's another way we can check up on how borrowers are doing -- by considering delinquencies. Looking at the latest data from Freddie Mac, they appear to be improving, slowly.

Here's a chart showing Freddie Mac's loan balance delinquent for more than 90 days. It's updated through August 2011:

freddie deilnquencies 2011-08 v2.png

First, you can see that delinquencies peaked in February 2010 and have mostly declined since. In August, the severe delinquency percentage was at 3.49% -- the lowest in two years.

But you can also see from this chart that the improvement here has been slowing recently. In fact, delinquencies appear to hit a plateau at around 3.5%. While this might be a bit of a concern, we should bear in mind that delinquencies actually rose late last year only to begin declining much more quickly last spring. So mortgage delinquencies fit into the not-great-but-could-be-worse narrative that has become all too common over the past year or two.

On a historical basis, the range of 3.5% still remains very high, however. This curve above has a long way to go before it approaches its 2007 levels, which mostly sat below 0.5%.

Finally, we should remember that Freddie Mac is just one data point. Different banks or mortgage portfolios will have different statistics. But Freddie provides a fairly good representative picture of the housing market. Although its portfolio consists of relatively high quality loans, so are the majority of mortgages in the U.S.