By Mark Huffman
ConsumerAffairs.Com
August 26, 2010
Homeowners are still having trouble paying their mortgage, but not
quite as much trouble as earlier this year, according to a report from
the Mortgage Bankers Association.
In its report on the second quarter of 2010, the MBA found that 9.85 of all loans outstanding were delinquent, meaning nearly one in ten mortgage holders had missed at least one payment. While troubling, its a decrease of 21 basis points from the first quarter of 2010, but an increase of 61 basis points from one year ago.
The percentage of loans on which foreclosure actions were started during the second quarter was 1.11 percent, down 12 basis points from last quarter and down 25 basis points from one year ago.
The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter was 4.57 percent, a decrease of six basis points from the first quarter of 2010, but an increase of 27 basis points from one year ago.
The combined percentage of loans in foreclosure or at least one payment past due was 13.97 percent on a non-seasonally adjusted basis, a four basis point decline from 14.01 percent last quarter.
The seriously delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.11 percent, a decrease of 43 basis points from last quarter, but an increase of 114 basis points from the second quarter of last year.
The numbers suggest that 2010 is a worse year for foreclosures than 2009, but that the trend has improved slightly in recent months. The question is whether that trend will continue or worsen if the economy slips into a double-dip recession.
Reversal of recent trends
These latest delinquency numbers contain a mixture of somewhat good news and somewhat bad news, said Jay Brinkmann, MBAs chief economist. The good news is that foreclosure starts are down and the inventory of homes anywhere in the process of foreclosure fell for the first time since 2006 and had the largest drop since 2005. Loans 90 days or more past due, the largest share of delinquent loans, also fell. The fact that both the 90 plus delinquency rate fell and the foreclosure start rate fell means that a significant number of these seriously delinquent loans have been successfully modified and reclassified as performing, current loans.
Offsetting that good news is the fact that, after declining since the beginning of 2009, the rate of short-term delinquencies is going up and the increase in these short-term delinquencies may ultimately drive the foreclosure measures back up.
The percent of loans one payment behind had peaked in the first quarter of 2009 at 3.77 percent and fell to 3.31 percent by the end of 2009, Brinkmann said. Ultimately the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story. Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers. Until we see the increase in the number of households that comes with an increase in the number of paychecks, all measures of the health of the housing industry will continue to be weak.
