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  1. Increase in First Time Mortgage Delinquencies Could Lead to More Foreclosures

    By on September 3, 2010

    Homeownership for animals is probably not a viable way to deal with excess housing supply.

    According to a report on CNN.com, the number of first time mortgage delinquencies is increasing.  3.51 percent of borrowers were 30 days delinquent in the Q210, up from 3.31 percent in Q110.  This could be the first signal that there is another wave of foreclosures on the way.

    The first wave of foreclosures appears to be receding.  The delinquency rate dropped to 9.85 percent in the second quarter, down from 10.06 percent in the first quarter.  Seriously delinquent mortgages (90+ days late) fell to 9.11 percent in Q210 from 9.54 percent in Q110.  While REO property is accumulating at lenders, fewer homeowners are entering into the foreclosure process- for now.  It remains to be seen whether or not this trend will continue.

    Fairly obviously, the main cause of foreclosure (and delinquency) is loss of income.  Unemployment remains high (currently U-3 unemployment is at 9.6 percent and the broader U-6 measure is at 16.7 percent).  Nothing in the current models suggests that the labor market will see significant improvements in the near future.  This month’s non-farms payroll report was not particularly encouraging.

    Continue Reading…

    Category: Mortgage Rates

  2. More Than 12 Percent of Mortgages Nationwide Delinquent or in Foreclosure

    1 By on July 7, 2010

    I’ll keep this particular piece of bad news relatively short: Lender Processing Services reports that mortgage delinquencies were up fairly substantially last week.  Mortgage delinquencies in May increased to 9.2 percent, up 2.3 percent from the April.  This is also a 7.9 percent increase from the previous year.

    Going a little further, the nationwide foreclosure rate is 3.2 percent, meaning that more than 12 percent of mortgages are delinquent or in foreclosure.  Florida and Nevada lead the nation in non-current mortgage loans, with 22.4 percent and 21.8 percent respectively.

    Additionally, the number of delinquent loans that are “cured” (become current) is declining, meaning that fewer and fewer people who become delinquent on their mortgages are able to catch up on payments.

    None of this bodes particularly well for the future of the economy or the housing market.  Further home price declines could certainly contribute to additional foreclosures.

    Category: General

  3. FHA Mortgage Delinquencies Drop in April

    By on June 7, 2010

    fha1An article by Nick Timiraos at the Wall Street Journal this morning details the drop in delinquent Federal Housing Administration (FHA) mortgages.  Over the past several months many in Washington have worried that the mortgage insurer would require a bailout from the federal government to avoid insolvency.  The FHA is required by law to maintain capital reserves of at least 2 percent of the value of the mortgages it insures.  It is estimated that the reserve has fallen to 0.5 percent, and an increase in delinquencies could wipe out the reserves entirely, endangering an important source of funding in the mortgage industry.

    Back in April, Congress debated changing the minimum FHA down payment in order to bring the capital reserves to acceptable levels.  The initiative was defeated, although annual mortgage insurance premiums were raised.

    Now we have learned that delinquent loans fell unexpectedly in April.  8.5 percent of loans were at least 90 days past due, a number which has declined for three straight months since the high of 9.4 percent in January.  Delinquent loans have also declined at Fannie Mae and Freddie Mac.

    Although loan delinquency is still extremely high on a historical basis, the decline provides hope that the worst of the foreclosure crisis may be behind us.  According to the article, almost 5 million borrowers were seriously delinquent at the end of March.

    While foreclosures are at a record high, it appears that more homes are entering the final stages of foreclosure, and less homes are entering the beginning stages.  This might be a sign that banks are finally starting to work through their massive backlog of foreclosures, a process that could take years.

    Low mortgage rates and the first time home buyer tax credit spurred a lot of home purchases, and these new mortgages are written with much higher underwriting standards than mortgages from 2006-2008.  The FHA is depending upon these higher quality mortgages to balance out the damage caused by older mortgages of dubious quality.

    Category: Mortgage Rates

  4. Delinquencies Decrease, Pending Home Sales Jump

    By on June 2, 2010

    home-salesA report from Fannie Mae this morning showed that the rate of serious delinquencies of single family homes (behind at least 90 days on the mortgage) fell to 5.47 percent in March, down from 5.59 percent in February.  One year prior, the rate of serious delinquencies was 3.15 percent.

    This is the first decline in serious delinquencies in nearly 4 years. Although the overall foreclosure rate is up, fewer houses are entering into the foreclosure process.  This probably indicates that Fannie Mae and other lenders are actually processing more foreclosures than any fundamental shift in the housing market.  This is probably a good thing, though, as it will allow the housing market to finally bottom out and hopefully stage a comeback.

    In other housing news, The Pending Home Sales Index from the National Association of Realtors came out this morning, and as expected we saw another spike in pending home sales in April.  Pending home sales increased 6.0 percent in April, and were 22.4 percent higher than April 2009.

    These increases can be attributed to the first time home buyer and repeat home buyer tax credits, which expired at the end of April.  In order to claim these credits, buyers needed to have a contract in place by April 30, and close on a home prior to July 1st.  As we discussed this morning, applications for purchase mortgages declined precipitously after the expiration of the credit.  Soon enough we will see home sales decline, assuming all other factors remain the same.

    Category: Mortgage Rates

  5. Mortgage Rates, Delinquencies Fall

    By on April 19, 2010
    Delinquencies are down for the second straight month.

    Delinquencies are down for the second straight month.

    Two pieces of auspicious news for the housing market emerged today.  Mortgage delinquencies appear to be on the downswing, and mortgage rates fell for the first time in more than a month.

    A study published by LPS Applied Analytics, a group that studies mortgages, showed that mortgage delinquencies fell in March, marking the second straight monthly decline.  The number of home loans that were more than thirty days past due or in foreclosure declined 8.6 percent.  The biggest decline was among loans that were seriously delinquent (more than thirty days past due).  Seriously delinquent loans fell to the lowest level since the Spring of 2008.

    Although the number of real estate owned homes increased, the total number of loans that are in foreclosure or delinquent is down almost 650,000 since January.  Part of the decrease in foreclosures can be attributed to government efforts to modify mortgages, such as the Home Affordable Modification Program (HAMP).  230,000 borrowers have received permanent modifications.  Many consider this number disappointing because government efforts were projected to help many more borrowers.  There are over a million mortgages that have been temporarily modified or are waiting for modification.  The government has enacted several changes to HAMP that are intended to broaden the impact of the program.

    The average mortgage rate on a 30 year fixed-rate mortgage was 5.07 percent last week, down from 5.21 percent the previous week. This is still significantly higher than the historical low of 4.71 percent in December 2009.    While I still believe that mortgage rates are headed higher by the end of the year, this drop is a temporary respite and represents a good opportunity to lock in a low rate.  Mortgage rates will be volatile for the near future as the bond market fluctuates and the market deals with the withdrawal of support from the Fed.

    Although unemployment remains high, most indicators show that the economy is improving and the worst of the recession should be behind us.  Most economists and analysts agree that mortgage rates will increase through the end of the year.  Do not squander this opportunity to lock a low rate and save yourself thousands of dollars.  Call us today at 877-868-2509.

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    Category: Mortgage Rates

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