Atlanta Real Estate Blog

Nearly 25% Of All Mortgages Delinquent, 230% Increase | 2011Real Estate Market Predictions

 

Outlook for Real Estate Investors

Expect plenty of choice in lower priced properties.  Demand for rentals should grow as more "under water" homeowners are forced into foreclosure.

Outlook for Residential Home Buyers

Expect plenty of choice in lower priced properties.  The longer you wait to buy, the more likely that the "best value" properties will already be sold.  Credit is likely to remain tight.

Outlook for Residential Home Sellers

The glut of additional foreclosures on the housing market should drive down prices.  While homes may be worth more now, it seems unlikely that they will hold their current values.

What's Happening With Mortgages and Delinquencies?

(Excerpts from a recent Mortgage Bankers Association Press Release ….)

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 10.06 percent of all loans outstanding as of the end of the first quarter of 2010, an increase of 59 basis points from the fourth quarter of 2009, and up 94 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.  The non-seasonally adjusted delinquency rate decreased 106 basis points from 10.44 percent in the fourth quarter of 2009 to 9.38 percent this quarter.

The percentage of loans on which foreclosure actions were started during the first quarter was 1.23 percent, up three basis points from last quarter but down 14 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 first quarter was 4.63 percent, an increase of five basis points from the fourth quarter of 2009 and 78 basis points from one year ago.  This represents another record high.

The combined percentage of loans in foreclosure or at least one payment past due was 14.01 percent on a non-seasonally adjusted basis, a decline from 15.02 percent last quarter.

The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.54 percent, a decrease of 13 basis points from last quarter, but an increase of 230 basis points from the first quarter of last year.

The seasonally adjusted delinquency rate increased for all loan types with the exception of FHA loans. On a seasonally adjusted basis, the delinquency rate stood at 6.17 percent for prime fixed loans, 13.52 percent for prime ARM loans, 25.69 percent for subprime fixed loans, 29.09 percent for subprime ARM loans, 13.15 percent for FHA loans, and 7.96 percent for VA loans.  On a non-seasonally adjusted basis, the delinquency rate fell for all loan types.

The foreclosure starts rate increased for all loan types with the exception of subprime loans. The foreclosure starts rate increased six basis points for prime fixed loans to 0.69 percent, 17 basis points for prime ARM loans to 2.29 percent, 18 basis points for FHA loans to 1.46 percent, and eight basis points for VA loans to 0.89 percent.  For subprime fixed loans, the rate decreased nine basis points to 2.64 percent and for subprime ARM loans the rate decreased 39 basis points to 4.32 percent.

Change from last year (first quarter of 2009)

Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes.   The non-seasonally adjusted delinquency rate increased 151 basis points for prime fixed loans, 172 basis points for prime ARM loans, 343 basis points for subprime fixed loans, and 244 basis points for subprime ARM loans from the first quarter of 2009.  The delinquency rate was 48 basis points lower for FHA loans and 12 basis points for VA loans relative to the same quarter a year ago.

The non-seasonally adjusted foreclosure starts rate increased eight basis points for prime fixed loans, 36 basis points for FHA loans and 17 basis points for VA loans compared to the first quarter of 2009.  The rate decreased 22 basis points for prime ARM loans, 10 basis points for subprime fixed loans, and 259 basis points for subprime ARM loans on a year over year basis.

About half of the states saw increases in the rate of foreclosure starts on a year over year basis, with the largest increases coming in Oregon, North Carolina and Maryland.  The largest decreases were in Florida, Rhode Island and California.  Almost all of the states saw year-over year decreases in subprime ARM foreclosure starts while almost all had increases in prime fixed-rate and FHA foreclosure starts.

 

Tags: Mortgage Bankers Association, MBA, subprime ARM loans, subprime fixed rate loans, nearly 25% Of All Mortgages Delinquent, delinquent loans, foreclosure starts, prime fixed rate foreclosures, FHA foreclosure starts, National Delinquency Survey, tight credit,  Outlook for Real Estate Investors, Outlook for Residential Home Buyers, Outlook for Residential Home Sellers, ATLShortSales.com.