1 in 8 US Mortgages Falling Behind
This is an astonishing number:
“A survey found that one in eight U.S. households with mortgages was in foreclosure or behind on its mortgage payments during the second quarter, putting added pressure on programs aimed at preventing foreclosures.”
As previously discussed, subprime is no longer the main offender — Prime mortgages are becoming delinquent at an accelerating pace:
“While foreclosure starts have slowed on the subprime loans that ignited the mortgage and banking crisis, loans extended to borrowers with good credit are deteriorating at a faster clip as falling home prices and mounting job losses weigh on more households.
The Mortgage Bankers Association said its latest survey, released Thursday, showed that 13.2% of mortgages on homes with one to four units were at least a month overdue or in the foreclosure process in the April-to-June period, up from 12.1% in the first quarter and 9% a year earlier . . .
Deteriorating prime loans are increasingly behind the steady rise in delinquencies and foreclosures. Among prime loans, 9% were past due or in foreclosure at the end of June, up from 5.35% one year ago. For subprime loans, those for borrowers with weak credit records or high debts relative to income, the rate was 39.5%, compared with 30% last year.
Prime loans, however, accounted for 58% of foreclosure starts, up from 44% last year. Meanwhile, subprime mortgages accounted for 33% of foreclosure starts, down from 49%. Prime fixed-rate mortgages, usually considered among the safest of all loan types, accounted for one in three foreclosure starts, up from one in five.” (emphasis added)
Note that this represents a significant shift — subprime was what drove the boom and eventual bust; the prime foreclosure issue is a function of the deep recession and job losses of the past 2 years.
As the chart shows, Foreclosure rates vary dramatically by region: its 1 in 20 in NJ, but closer to 1 in 8 in Florida.
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Sources:
Delinquencies Continue to Climb, Foreclosures Flat in Latest MBA National Delinquency Survey
MBA, 8/20/2009
http://www.mbaa.org/NewsandMedia/PressCenter/70050.htm
Souring Prime Loans Compound Mortgage Woes
NICK TIMIRAOS
WSJ, AUGUST 21, 2009
http://online.wsj.com/article/SB125082120504548471.html
De.li.cious
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August 20th, 2009 at 11:42 pm
Was this “unexpected” or “better than expected?” That’s the key right there.
August 20th, 2009 at 11:54 pm
Obviously, the pernicious CRA had more impact than all of us wingnuts ever could have imagined!
/snark
August 20th, 2009 at 11:58 pm
[...] News Sources wrote an interesting post today onHere’s a quick excerptThis is an astonishing number: “A survey found that one in eight U.S. households with mortgages was in foreclosure or behind on its mortgage payments during the second quarter, putting added pressure on programs aimed at preventing foreclosures.” As previously discussed , subprime is no longer the main offender — Prime mortgages are becoming delinquent at an acceleating pace: “While foreclosure starts have slowed on the subprime loans that ignited the mortgage and banking crisis, loan [...]
August 21st, 2009 at 12:14 am
anybody know what’s crashing the futures?
August 21st, 2009 at 12:20 am
Well, “I’m” astonished. At least by the math. The article says 1 in 8 (12.5%) yet the graph depicts a number of about 8%.
August 21st, 2009 at 1:29 am
berg:
Body of article says: “The Mortgage Bankers Association said its latest survey, released Thursday, showed that 13.2% of mortgages on homes with one to four units were at least a month overdue or in the foreclosure process in the April-to-June period, up from 12.1% in the first quarter and 9% a year earlier.”
graph shows about 8% delinquent 90 days or more, and article says 13% delinquent 30 days or more. whole article is below, I used google trick to get it without having subscription :)
By NICK TIMIRAOS
A survey found that one in eight U.S. households with mortgages was in foreclosure or behind on its mortgage payments during the second quarter, putting added pressure on programs aimed at preventing foreclosures.
While foreclosure starts have slowed on the subprime loans that ignited the mortgage and banking crisis, loans extended to borrowers with good credit are deteriorating at a faster clip as falling home prices and mounting job losses weigh on more households.
The Mortgage Bankers Association said its latest survey, released Thursday, showed that 13.2% of mortgages on homes with one to four units were at least a month overdue or in the foreclosure process in the April-to-June period, up from 12.1% in the first quarter and 9% a year earlier.
As home sales have picked up in recent months, some were expecting foreclosures and delinquencies to ease. But Jay Brinkmann, chief economist at the MBA, said foreclosures weren’t expected to peak until later in 2010 when the economy improves.
“Just because we see prices level off doesn’t necessarily mean we’ll see a big reduction in foreclosures,” said Mr. Brinkmann, in part because many homeowners would still owe more than their homes were worth.
Deteriorating prime loans are increasingly behind the steady rise in delinquencies and foreclosures. Among prime loans, 9% were past due or in foreclosure at the end of June, up from 5.35% one year ago. For subprime loans, those for borrowers with weak credit records or high debts relative to income, the rate was 39.5%, compared with 30% last year.
Prime loans, however, accounted for 58% of foreclosure starts, up from 44% last year. Meanwhile, subprime mortgages accounted for 33% of foreclosure starts, down from 49%. Prime fixed-rate mortgages, usually considered among the safest of all loan types, accounted for one in three foreclosure starts, up from one in five.
More than 235,000 borrowers have begun trial mortgage modifications under an Obama administration effort launched in March that focuses on reducing monthly mortgage payments for borrowers who have fallen behind on their payments. An additional 60,000 borrowers with little or no home equity have refinanced to lower rates through a parallel program launched by the administration.
But modification programs may not be able to help the growing number of borrowers who are falling behind on their payments because they are losing their jobs. Most loan-modification programs have been designed to help borrowers with loans that reset to higher payments or with high debt-to-income ratios.
The first wave of foreclosures that began two years ago, when the economy was still relatively healthy, was triggered by a downturn in housing prices that made it harder for subprime borrowers to refinance mortgages that were resetting to higher payments. Now, foreclosures are increasingly being driven by traditional economic problems, including falling home prices, falling incomes and rising joblessness.
Four states — Florida, Nevada, Arizona and California — continue to account for a large part of foreclosures in the U.S., but their share of new foreclosures fell to 44% in the second quarter, from 46% in the first quarter. In Florida, nearly 23% of mortgages were past due, including 12% that were in some stage of foreclosure and 5% that were 90 days or more past due at the end of June. Nevada trailed closely behind, with 21% of mortgages that were late or in foreclosure.
More borrowers in areas that have seen a big plunge in home prices now have mortgages that exceed the value of their homes. Two-thirds of borrowers in Nevada and nearly half of borrowers in Arizona and Nevada had negative equity at the end of June, according to First American CoreLogic, a real-estate-data firm. Nationally, a third of mortgaged properties were underwater.
Foreclosures also continued to rise on loans backed by the Federal Housing Administration, to 3% from 2.8% in the first quarter and 2.2% one year ago. The collapse of the subprime-mortgage market in 2007 has swelled the volume of loans headed to the FHA, which insures lenders against the risk of defaults on loans. FHA-insured loans are available to borrowers who make down payments as low as 3.5%.
Originations of FHA loans increased by 30% in the second quarter from the previous quarter, according to Inside Mortgage Finance, a trade publication.
August 21st, 2009 at 2:21 am
The BP crowd might find a blog post I made tonight interesting, Bursting the bubble: Shadow Inventory does not exist.
Basically, people keep thinking there is this huge number of homes foreclosed on but not being marketed by the banks. The numbers simply don’t jive in California. There is no large number of bank owned homes not on the MLS unless they just recently got foreclosed on and are going through pre-list.
I’ve searched public records and matched it with MLS data for my local area and haven’t found it. Foreclosures are a matter of public record.. they can’t be hidden.
The real shadow inventory is the homes not being foreclosed on..
I highly recommend the following posts explaining what is currently going on:
http://mortgage.freedomblogging.com/2009/08/06/foreclosure-wave-gets-bigger/15037/
And why the foreclosure next wave may never come:
http://www.foreclosuretruth.com/blog/sean/waiting-catch-wave-surge-reo-listings-unlikely
These views (mine included) are definitely not the norm but they are data driven..
August 21st, 2009 at 6:15 am
The term Shadow Inventory — at least the way that I use the phrase — refers to the homes purchased during the boom that are not offered for sale, but would be if the market was improved.
They are currently being rented or carried at a loss or simply owned — and as soon as prices firm up, they will hit the market.
Think of it as overhead resistance . . .
August 21st, 2009 at 6:23 am
BR,
Many people use Shadow Inventory as a defintion of bank owned homes not for sale on the market:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/04/08/MNL516UG90.DTL&type=business&tsp=1
http://www.cnbc.com/id/32108755
http://www.foreclosuretruth.com/blog/sean/reo-inventory-hidden-shadows
http://blogs.wsj.com/developments/2009/07/21/are-banks-holding-a-shadow-inventory-of-homes/
http://www.voiceofsandiego.org/articles/2009/05/06/toscano/717shadowinventory042109.txt
http://www.doctorhousingbubble.com/shadow-housing-inventory-the-deception-of-the-foreclosure-numbers-and-the-real-reo-picture-a-case-study-of-southern-california-real-estate-how-40000-homes-are-hidden-from-public-view-by-banks/
Just as many people use it for the whole world of inventory wanting to sell but not on market.
My blog post was directed for the former not the latter.
August 21st, 2009 at 6:54 am
Here is another data point showing that the market is currently supply constrained in California:
http://effectivedemand.blogspot.com/2009/08/supply-constrained.html
Until some of that latent supply (wanting/needing to sell or in default) becomes effective supply (a home being marketed on the MLS) sales will be limited.
Bernanke has created a very good market to liquidate supply into but we are running out of homes to sell currently.
August 21st, 2009 at 7:06 am
How long?
How long must we sing this song?
How long?
How loooooong?
August 21st, 2009 at 8:16 am
Euroland is feeling good, $ not so much.
August 21st, 2009 at 8:56 am
Headline is very misleading!
One in eight describes FLA and NEV, not the nation. Don’t start playing CNBC with the headlines Ritholtz.
August 21st, 2009 at 9:17 am
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August 21st, 2009 at 10:45 am
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