A major credit reporting company predicts mortgage delinquency rates will continue rising in the Sacramento area – with 12 percent of homeowners falling at least two months behind on their payments by year’s end.

That’s nearly twice the national projection and a dramatic jump from just two years ago, when less than 2 percent percent of area homeowners’ notes were delinquent.

"California faces some challenges, and that’s reflected in the statistics," said Ezra Becker, director of consulting and strategy at TransUnion, one of the nation’s three large credit reporting agencies.

"There are serious delinquency rates in California, and it’s not out of the woods by the end of the year," Becker added. He predicted the delinquency rates in California would begin falling in 2010.

TransUnion, based in Chicago, analyzed trends in the mortgage industry for the second quarter and offered year-end projections for the Sacramento market and the state.

Today, Sacramento’s 60-day mortgage loan delinquency rate – the percentage of homeowners at least 60 days behind on their mortgage payments – stands at 9.62 percent, just below the state’s rate of 9.7 percent, according to Trans Union.

The national rate, at 5.81 percent, is projected to rise to 6.93 percent by the end of the year.

California trails just Arizona, Florida and Nevada, which has the highest delinquency rate at nearly 14 percent. Delinquency rates are a key indicator because the 60-day threshold is traditionally seen as a step toward foreclosure.

In markets where home values have dropped most sharply, delinquency and foreclosure rates are highest. By that measure, the capital remains in trouble. In June, more than half of Sacramento-area households owed more on their homes than they were worth, First American CoreLogic reported last week.

"As long as that persists, we’ll see delinquencies and foreclosures continue," said Suzanne O’Keefe, an economics professor at California State University, Sacramento. "Until the housing market turns around, there’s not much hope for those rates to reverse."

By the end of the year, TransUnion predicts, 12.2 percent of Sacramento-area homeowners and more than 14 percent of homeowners statewide will be at least two months behind on their house payments.

Double-digit percentage unemployment and unpaid furlough days are increasingly catching up with homeowners who have "safe" fixed-rate loans, rather than the subprime loans that initially sparked the housing crisis.

Mike Himes, director of NeighborWorks Homeownership Center in Sacramento, which counsels struggling and first-time homeowners, said his office is seeing more clients facing growing debt and making choices between house payments and other expenses. His clientele includes a growing number of state workers whose paychecks have been pared by unpaid furloughs.

"There’s a lot of money borrowed to stay in the house and keep up with living expenses," Himes said. "This is becoming more and more of a problem."

Despite the current darkness, Becker of TransUnion predicted the clouds could lift in 2010. And when they do, the sun will shine more brightly on the Golden State than the rest of the nation. TransUnion predicts that the delinquency rate will fall three times faster than in the nation as a whole.

"We anticipate the recovery will be more robust and last longer" than in other regions of the country, he said.