Prime fixed-rate loans, those held by homeowners with the best credit, accounted for nearly 33 percent of new foreclosures in the third quarter, compared to only 21 percent a year ago.
An unknown number of foreclosed homes yet to enter the pipeline.
by Broderick Perkins
© 2009 DeadlineNews.Com
Unauthorized use of this story is a copyright violation -- a federal crime
Deadline Newsroom - Rising unemployment is undoing home ownership, unraveling the housing rebound and extending the foreclosure crisis at least until very late next year.
Higher foreclosure rates among homeowners with prime, fixed-rate mortgages (FRMs) are replacing sub-prime loan failures at an alarming rate, according to a third quarter mortgage delinquency survey.
Nationwide, 14.41 percent of mortgage paying homeowners were either behind on payments or in foreclosure at the end of September, with unemployment as the primary culprit, according to the Mortgage Bankers Association's (MBA) latest National Delinquency Survey.
The 14.41 percent was another record high for the ninth consecutive quarter, even as home prices began to show increases amid demand spurred by tax credits and low interest rates.
Prime fixed-rate loans, those held by homeowners with the best credit, accounted for nearly 33 percent of new foreclosures in the third quarter, compared to only 21 percent a year ago.
Those prime FRM failures also accounted for 44 percent of the quarterly increase in foreclosures and that number is due to grow. Prime fixed-rate loans represented 54 percent of the quarterly increase in loans 90 days or more past due, but not yet in foreclosure, according to the MBA.
"Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in the GDP (gross domestic product)," said Jay Brinkmann, MBA's chief economist.
In October, the unemployment rate rose to 10.2 percent, the highest since April 1983, with the largest job losses in construction, manufacturing, and retail trade, according to the U.S. Labor Department.
In October alone, the number of unemployed people increased by 558,000 to 15.7
million. Since the start of the recession in December 2007, the number of jobless people has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points.
"Over the last year, we have seen the ranks of the unemployed increase by about 5.5 million people, increasing the number of seriously delinquent loans by almost 2 million loans and increasing the rate of new foreclosures from 1.07 percent to 1.42 percent," Brinkmann added.
The housing market received some welcomed jolts from the first-time home buyer tax credit, the tax credit's extension and expansion this year, other government programs and mortgage rates sliding below 5 percent.
The S&P/Case-Shiller Home Price Index today said home prices rose for the second consecutive quarter, but remained nearly 9 percent lower than a year earlier.
Prices nationwide rose 3.1 percent in the three months ending on September 30, following a similar rise during the second quarter of the year.
Unfortunately, experts say there is an unknown number of foreclosed homes yet to enter the pipeline -- strategic defaults and foreclosure forbearances.
Those problematic properties will keep prices from returning to anything near boom time levels and may even cause prices to plunge.
Strategic defaults occur when homeowners refuse to pay mortgages that exceed the value of their home. Foreclosure forbearance stems from lenders delaying foreclosure proceedings on mortgages that 90 days or more late.
"I see growing anecdotal evidence of forbearance of lenders. The logic for it is if they can't sell it anyway, the lender is better off with the original homeowner still in place and caring for the asset in most cases, than forcing them out and having some of them tear the place up on the way out," said Bruce Hahn, president of the American Homeowners Foundation.
• Click on the keywords below for more stories on this subject.
© 2009 DeadlineNews.Com
Advertise on DeadlineNews.Com | Shop DeadlineNews.Com
Get "News that really hits home!" for your Web site or blog from the DeadlineNewsGroup.Com.
You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.
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.
Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
• National Consumer News Examiner
• National Real Estate Examiner
DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime
No comments:
Post a Comment