National Delinquency Rate Is Letting Up
The national mortgage loan delinquency rate — the ratio of borrowers 60 or more days past due — decreased in the first quarter of 2010 after steady increases for 12 consecutive quarters, according to a TransUnion report.
The delinquency rate dropped to 6.77 percent, a level slightly lower than in the fourth quarter of last year. This statistic, which is traditionally seen as a precursor to foreclosure, reflects a decrease of 1.74 percent from the previous quarter’s 6.89 percent average. Year over year, mortgage borrower delinquency is still up approximately 30 percent.
“With prices beginning to rise, increasing consumer confidence and positive trends in the equity markets, home owners who are currently upside down on their mortgages may be less inclined to join the ranks of defaulters, which have been growing in number since the summer of 2008,” FJ Guarrera, vice president in TransUnion’s financial services business unit, said in a statement.
TransUnion culls information quarterly from approximately 27 million anonymous, randomly sampled, individual credit files, representing approximately 10 percent of credit-active U.S. consumers and providing a real-life perspective on how they are managing their credit health.
The company’s forecasting models indicated that mortgage delinquency rates would be leveling off in mid 2010 at both the state and national levels.
Source: TransUnion
Future Foreclosures Could Hamper Housing
In spite of signs of a recovery, many home buyers are continuing to fall behind on their mortgages. Some economists see this as an indication that a second major wave of foreclosures is likely, even though the housing market appears to be stabilizing.
This next upsurge in foreclosures could cause more disruption and push prices down farther.
Housing experts say that the recent favorable housing data doesn’t reflect the number of properties that banks have left in limbo — repossessed, but not yet on the market.
“Lenders are deluged by late-stage delinquencies. The pent-up foreclosure inventory is there,” says Massoud Ahmadi, director of research for the Maryland Department of Housing and Community Development.
Foreclosures Decline for Fourth-Straight Month
Foreclosures declined 8 percent in November compared with October, but were still up 18 percent from November 2008.
This was the fourth-straight month that U.S. foreclosures have declined since hitting an all-time high in July, according to online foreclosure marketer RealtyTrac.
Default notices, an indicator of coming foreclosures, also were down 8 percent from October, but up 22 percent from November 2008. Bank repossessions were flat from the previous month and down 2 percent from November 2008.
“We don’t really believe the underlying problems have been resolved,” said Rick Sharga, senior vice president for RealtyTrac. Many borrowers, he told the Associated Press, “simply aren’t going to qualify” for government and mortgage servicer help.
States with the highest foreclosure rates are:
* Nevada
* Florida
* California
* Arizona
* Idaho
* Michigan
* Illinois
* Utah
* Maryland
* New Jersey
Four states account for more than 50 percent of actual foreclosures: California, Florida, Illinois, and Michigan.
FHA Cracks Down on Dubious Lenders
The Federal Housing Administration served subpoenas Tuesday on 15 mortgage companies with high default rates for FHA-backed loans.
The agency has previously taken action against several lenders with questionable records, including Lend America and Taylor, Bean & Whitaker Mortgage Co.
Department of Housing and Urban Development’s Inspector General, Kenneth Donohue said he plans to determine why these 15 lenders had so many loans that defaulted shortly after they closed.
Troubled lenders include: First Tennessee Bank N.A, of Memphis, Tenn.; Alethese LLC, of Lakeway, Texas; Security Atlantic Mortgage Co., of Edison, N.J.; Pine State Mortgage Corp., of Atlanta; Birmingham Bancorp Mortgage Corp., of West Bloomfield, Mich.; Alacrity Financial Services LLC, of Southlake, Texas; Assurity Financial Services LLC, of Englewood, Colo.; D and R Mortgage Corp., of Farmington, Mich.; Webster Bank, of Cheshire, Conn.; Mac-Clair Mortgage Corp., of Flint, Mich.; Americare Investment Group Inc., of Arlington, Texas; 1st Advantage Mortgage, of Lombard, Ill.; American Sterling Bank, of Independence, Mo.; Sterling National Mortgage Co., Inc., of Great Neck, N.Y.; and Dell Franklin Financial LLC, of Columbia, Md.
John Courson, CEO of the Mortgage Bankers Association, applauded the crackdown. “We’re concerned about the viability of the program and we want to make sure that the bad apples and the bad players, frankly, are eliminated,” he said.
Feds Scold Bank of America, Wells Fargo on Loan Modifications
The Treasury Department on Tuesday announced that only 9 percent of eligible home owners had been helped by the federal program to modify home loans and prevent foreclosure.
It scolded banking giants Bank of America and Wells Fargo, both of which received federal bailout money, pointing out that these banks have been among the least willing to assist troubled borrowers.
Bank of American modified 4 percent of eligible loans, and Wells Fargo modified 6 percent.
Big banks that did better included JPMorgan Chase & Co., which modified 20 percent of eligible loans, and Citigroup Inc., which modified 15 percent.
The bank with the best results was Saxon Mortgage Services Inc., which helped about 25 percent of its eligible borrowers.
Source: The Associated Press, Alan Zibel (08/04/2009)
