Monday, June 15, 2009
by Broderick Perkins
© 2008 DeadlineNews.Com
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Deadline Newsroom - By the end of the year, the mortgage loan delinquency rate will soar to more than three times the more "normal" rate, according to a leading credit and information management company.
Credit reporting agency TransUnion.com recently issued a first quarter Mortgage Loan Delinquency Rate report with a dire forecast -- by year's end, mortgage loan delinquency (the ratio of borrowers 60 or more days past due) will reach 7 percent.
That's more than three times the typical 2 percent level common when "stable economic conditions" exist says Clifton M. O'Neal, a senior spokesman for TransUnion.
The projected increase in the mortgage delinquency rate is a whopping five times greater than it was at the end of the last recession, when it was only 1.4 percent.
The report reveals the rise in loan delinquencies during the first quarter this year, was at a slower pace, than during the fourth quarter of 2008.
However, the 5.22 percent loan delinquency rate during the first quarter this year, was a whopping 62 percent higher than the 3.23 percent rate a year ago. The quarterly increase was also the ninth straight increase.
Experts say foreclosure moratoriums, ironing out federal regulations and other mangled mortgage market-in-transition conditions may be masking the true level of foreclosures.
The TransUnion report comes on the heels of other bad housing news that leaves talk of a 2009 housing recovery little more than a hint of hopeful whispers.
• The Center For Responsible Lending reports 1 million foreclosures thus far this year, with another 1.4 million expected before the New Year.
• RealtyTrac.com says, default notices, scheduled auctions and bank repossessions were reported on 321,480 properties for the month of May, the third highest month on record and a record third straight month where foreclosure filings exceeding 300,000.
"While defaults and scheduled foreclosure auctions were both down from the previous month, bank repossessions, or REOs, were up 2 percent thanks largely to substantial increases in several states, including Michigan, Arizona, Washington, Nevada, Oregon and New York. We expect REO activity to spike in the coming months as foreclosure delays and moratoria implemented by various state laws come to an end," said James J. Saccacio, RealtyTrac CEO.
TransUnion said delinquency rates in the first quarter of 2009 were highest in Nevada (11.61 percent) and Florida (11.01 percent), while the lowest mortgage delinquency rates were found in North Dakota (1.51 percent), South Dakota (1.94 percent) and Alaska (2.14 percent).
The three areas showing the greatest percentage growth in delinquency from the previous quarter were Hawaii (up 34.4 percent), Oregon (up 30.7 percent) and Nevada (up 28.9 percent).
However Nebraska and South Dakota both showed a decline in mortgage delinquency rates, down 4.7 percent and 1.5 percent from the previous quarter, respectively.
TransUnion culls data for the report from approximately 27 million anonymous, randomly sampled, individual credit files.
"At the end of the 2001 Recession, the national 60-day or worse mortgage delinquency rate increased to a high of just over 1.4 percent," said Keith Carson, a senior consultant in TransUnion's financial services group.
"The troubling news is that the mortgage delinquency rate continues to climb upward at an average quarterly pace almost doubling that experienced in the last recession," Carson added.
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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.
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