Seasonally adjusted, 0.58% of loans entered the foreclosure process last quarter, compared with 0.54% in the fourth quarter of 2006 and 0.41% in last year's first quarter. The rates for the past two quarters are the highest in the survey's 37-year history. The MBA reported that the spike in foreclosures was much steeper in California, Florida, Arizona and Nevada than in other areas. Mr. Duncan said some speculators are walking away from properties in the face of falling prices and higher borrowing costs.
The percentage of loans now in the foreclosure process rose to 1.28%, up from 0.98% a year earlier. That's still well below the 1.51% recorded in the first quarter of 2002, in the wake of a brief recession.
And it looks like we may have a new econ-hack emerging at the NAR:
The trade group's chief economist, Doug Duncan, predicted that delinquencies would likely rise, peaking later in the year. He also said rising foreclosures probably wouldn't peak until next year. "Our view is that we will probably see modest increases in delinquencies and foreclosures for the next couple of quarters," Mr. Duncan said.
Nothing to see here, move along...
The housing market is going to be a mess for a long time. Builders don't see the possibility of a recovery until 2011. We still have at least 2 years of mortgage resets to go through. Something tells me the delinquency rates will be increasing for quite some time.
1 comment:
Consider the Source
Doug is the long-time chief economist of the Mortgage Bankers (NAR Ref?) and in many cases their chief spokesman, so consider him the voice of the association's view. Having tracked his economic forecasting for a decade, he tends to be very mid-range in his predictions over the long term.
That being said, the real issue is how we triage the mortgage situation for troubled loans.
First, all fraudulent and speculative loans should be investigated if there are irregularities in the paperwork, or written down by the holder if this was a failed gamble.
The next and toughest is those folks put in a house that is and will remain beyond their actual ability to afford the property in a stable housing market without appreciation gains to bail them out. There needs to be a private, non-profit entity to review cases and give the home owners a realistic outline of their options. In many cases, foreclosure or deeding the property to the lender will be the only options.
In the final group are those who have some prospects for retaining their property, but are in need of a mortgage instrument which will not reset and destroy their budgets. In those cases, options such as an expanded FHA program for in-place home owners, private funding of realistic fixed term loans, or even extended (40 year) mortgages should be considered to allow the home owners some way to keep their house.
We live in interesting times.
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