From MarketWatch:
U.S. homeowners had a harder time keeping up with their mortgage payments in the third quarter, the Mortgage Bankers Association said Wednesday, with the delinquency rate rising to 4.67% from 4.39% in the second quarter. A year ago, 4.44% of mortgage holders were 90 days or more past due on their loans.
The foreclosure rate inched higher in the third quarter, with 1.05% of mortgages in the foreclosure process vs. 0.99% in the second quarter, the MBA said. While delinquency rates on all types of loans rose in the third quarter, it was the subprime category — loans made to less creditworthy borrowers, that shot up the most to 12.56% from 10.76% a year ago.
“As we expected, in the third quarter delinquency rates increased across the board. However, increases were noticeably larger for subprime loans, particularly for subprime ARMs,” said Doug Duncan, chief economist for the MBA.
“This is not surprising given that subprime borrowers are more likely to be susceptible to the cumulative increases in rates we’ve experienced and the slowing of home-price appreciation that has resulted,” Duncan said.
Duncan said that although labor markets remained strong, the pace of job growth slowed in the quarter. The labor market is the most critical indicator for mortgage lenders because job loss is the biggest predictor of delinquency and foreclosure, Duncan said.Declining home-price appreciation and rising inventories of unsold homes also has put pressure on overburdened homeowners. Interest rates, which have fallen for the past six weeks, were also nearly a half a percentage point higher in the third quarter.
But Duncan said some increase in delinquencies and foreclosures was to be expected following two years in which those figures have remained historically low. He said even though “the housing market continued to normalize” in the third quarter, he expects delinquencies and foreclosures to continue to move up.
From Reuters:
US mortgage delinquencies, foreclosures mount -MBA
Late payments and new foreclosures on U.S. homes rose in the third quarter and are likely to grow as a massive wave of adjustable-rate mortgages reset at higher interest rates, the Mortgage Bankers Association said on Wednesday.
Delinquencies rose for all home loans, but most notably for adjustable loans to subprime borrowers who were already stretched before mortgage rates climbed, the industry trade group said in its quarterly National Delinquency Survey.
Still, the share of late payments and foreclosures will stay relatively low as the housing market regains its footing in the middle of next year and have a limited impact on the overall economy, the MBA said.
“Only 7 percent of all loans out there are subprime adjustable loans. We’re talking about a 12 percent delinquency rate on 7 percent of all home mortgages and the foreclosure rate is much lower than that,” said MBA Chief Economist Doug Duncan.
The mortgage delinquency rate increased to 4.67 percent in the third quarter, up from 4.39 percent in the prior quarter and from 4.44 percent in the third quarter of last year.
By loan type, the rate rose 15 basis points for prime mortgages to 2.44 percent from 2.29 percent, and 86 basis points for subprime, to 12.56 percent from 11.70 percent.
I have asked this before, but never got any responses.
Is anyone here using RealtyTrac (or has used it in the past)?
Homeowners on the move to Refi City
Refis are on the rise, but despite unexpectedly low rates, not all homeowners are seeking the security of fixed-rate mortgages.
http://tinyurl.com/y4tmyv
NEW YORK (CNNMoney.com) — Rarely has there been such an advantageous time to refinance into a 30-year fixed-rate mortgage if you have an adjustable-rate loan. But homeowners’ love affair with riskier ARMs is still strong.
According to financial information publisher HSH Associates, a one-year ARM, at 5.8 percent on average, now costs only a third of a percentage point less than a 30-year fixed-rate mortgage, at 6.2 percent. And ARM holders still face the risk of paying a higher interest rate down the road.
But while there’s a new refi boom in swing, not all borrowers are rushing for the security of fixed loans. One in three homeowners refinancing today is choosing the financially riskier interest-only and payment-option ARMs, according to data from Loan Performance.
Many who are doing so may have chosen those mortgages not because they want them but because they can’t afford the payments that would come due under a 30-year fixed rate, said Keith Gumbinger, HSH’s vice president. Some may be speculators who want to flip their property when prices improve and want to keep their costs as low as possible in the meantime.
From MarketWatch:
OFHEO says interagency guidelines apply to GSEs
2:51 PM ET, Dec 13, 2006 – 47 minutes ago
Fannie, Freddie must obey rules on nontraditional mortgages
2:51 PM ET, Dec 13, 2006 – 47 minutes ago
Mr Rogers pointed out that the Chinese are “amazing capitalists” with the average Chinese worker saving and investing 35% of his disposable income compared to the mere 1% that is saved by workers in the US.
“They (Chinese) all have televisions. They know how we live in the west and they are willing to save and invest to do it, which is the opposite of Americans who borrow to achieve their lifestyles.”
The US economy, in fact, is “out of control” and destined for a hard landing in the next few years; indeed Mr Rogers considers the US to be in recession already as the `strong dollar` policy of the current administration debases the currency and adds to the national debt.
Bob approves this message
BOOOOOOOOOOOOYAAAAAAAAAA
Bob
Americans are bunch of worker drones with fantasies of living like a king, but with a bankrole to barely pay monthly living expenses.
“Some mortgage companies continue to see weaker housing. The real estate market hasn’t yet bottomed out, Wells Fargo CEO Richard Kovacevich said in an interview. About a fifth of the 375 metropolitan statistical areas in the country have had home price decreases of 20 percent, he said.”
“‘It’s pretty ugly at the moment,’ Kovacevich said. Home prices are ‘really down much more’ than recent economic reports suggest, he said, citing the company’s internal data.”
I agree fully that phoney price reports are understating the true falloff!
BABBABABABABA
The RE machine is turning up the spin.
From MarketWatch:
Sovereign to cut 100s of jobs, shut mortgage offices
Sovereign Bancorp Inc. (SOV) plans to eliminate several hundred jobs as part of a soon to be announced cost-cutting initiative, according to people familiar with the matter.
As part of the plan, Sovereign is shuttering at least three of its five wholesale mortgage-loan offices, effectively pulling out of the nationwide mortgage business, three people said.
Sovereign this week is notifying employees about the wide-ranging cost-cutting plans, which could be publicly announced soon. The initiative marks the first effort by Chief Executive Joseph C. Campanelli to put his stamp on the company. Campanelli took Sovereign’s helm in October, after longtime CEO Jay S. Sidhu was forced out. A panel of directors is conducting a search for a permanent CEO, and Campanelli is among the candidates for that job.
A must see video, hat tip to Calculated Risk:
http://www.connectlive.com/events/ots1206/panel1.asx (Windows Media)
jb
No, I mean it. Grab a seat, grab a drink, and sit through it..
jb
JB how long is that…
Half hour.. Hour? It’s quite long actually.
jb
Really is a great video, even if you are not an econo-geek.
Most regular readers will be able to follow it without a problem, especially if you actively follow the discussions here.
The only thing the video is missing is Booyaa Bob yelling out from the audience. :)
jb
Wells Fargo & Co. (WFC) Chief Executive Richard M. Kovacevich said Wednesday mortgage loan volumes are on track to fall 15% this year and possibly another 15% in 2007.
http://www.marketwatch.com/news/story/wells-fargo-ceo-sees-mortgage/story.aspx?guid=%7b5F6C2145-144B-4134-90C3-CE9E8F69ECBE%7d
The full set of videos can be found here:
http://www.connectlive.com/events/ots1206/
Seiders is just too polished, too corporate.
jb
It’s 81 minutes.
This is just flat wrong:
“Only 7 percent of all loans out there are subprime adjustable loans. We’re talking about a 12 percent delinquency rate on 7 percent of all home mortgages and the foreclosure rate is much lower than that,” said MBA Chief Economist Doug Duncan.
The subprime fixed-rate delinquency rate went up to 9.56%, and the subprime adjustable rate went up to 13.22%. 12.56% is the delinquency rate for ALL subprime.
It’s pretty bad when you have to spin your own survey! They are running scared. Read the whole thing, and see what y’all think.
for some harsh reality about foreclosures, check out these sites:
http://www.foreclosuretalk.com
http://www.foreclosure.com
What struck me about these sites is how many people are playing the foreclosure flip game. Barney Frank’s speculators are circling like vultures on these sites. Never knew it was such a cottage industry.
#9>
40-50% of mortgage loans in 2004-2005 are “interest only”!!!!
RE food chain companies are just collapsing and laying off people big time.
anderson windows Lay off 400
Hubbell — 1000
stanley Furniture 250
The lsit goes on and on.
The NAR was saying something about a bottom?
It can always collapse thru the floor then bottomless pit.
a friend who happens to be an electrician said his business has fallen off 50%.Looking for other areas to expand.
Compound this out across the country with all these 2-5 person companies.
Look at this crack smoker:
MLS 2353118
About $250K overpriced for summer 2005, let alone today’s market. Should be a great ride chasing the market down.
from #9
Bill Longbrake, Vice Chair, Washington Mutual, Inc
Previous burst existing home sales fell for 31 months. This time it’s been just 5 months as of yet!
Trend towards increasing inventories of new homes for quite some time.
Further declines ahead. Correction period lasts for 3-5 years. Bottom is still months away.
Why is the current downturn worse than the previous declines – 8 reasons
1] downturn to occur across the board in a synchronized time frame.
2] Nominal increases in home prices much higher than previous booms.
3] Because of the low inflation environment, the nominal price decrease will be much higher than previous declines.
4] Higher nominal decrease could force defaults.
5] Housing recession could push to other markets causing job and income losses leading credit to credit losses thus putting further pressure on home prices. Jury is out on the effect of housing market on the rest of market.
6]Chances of a fed bail out remote this time.
7]?
8]?
WaMu CEO: Mortgage biz looks tough in 2007
Banking chief says he expects another bleak year in mortgage industry, citing overcapacity, low margins.
http://money.cnn.com/2006/12/13/real_estate/bc.wamu.mortgage.reut/index.htm?postversion=2006121317
I might be wrong about the video, but it boils down to oil:
The bad hairdo pundit said:
if oil less than 70$/barrel (aka gas under 3$/gal) then FED interest rate lower or=
5 1/4% then housing prices will hold their ground then the housing Ponzi scheme will go on.
Unrealtor,
re: 2353118
Its on a cul-de-freakin-sac!!! Of course it’s worth 1.5 times the same house on a regular street. Cul-de-sac baby! Nice and quiet. It is phat,and, well, fat. US studies have shown that people living on a cul-de-sac are on average 6 lbs. heavier than those living in a traditional grid-type street. Whatever.
The only difference between 2005 and now is that you have more selection to choose from when you overpay for that 2BR 1Bath Cape Cod. Prices are still at 2005+ levels. Sure, some flippers are getting burned in Miami, Vegas and parts of California, but here in NNJ, it really is different.
All I see are more houses staying on the MLS for more time. Fewer sell but when they do, its for 2005+ prices. Even if the sales are below asking price, they are still fetching what their neighbors got last year, or more.
It really is different in NJ.
Seneca: I do not know where you are and what you are seeing, but I think you ,ay be deluding yourself. Asking prices are dropping dramatically, and yet houses still sit on the market. In my so called desireable BC town, asking prices are back to 2004 and is some cases 2003 evels,and yet still sitting. Yeah it is diferent in NNJ, different in that the decline is going to be extreme.
Extreme run up in prices, followed by an extreme down turn.
JB,
Re: #9
As usual, your video link rocks.
Seneca,
I am looking at a house now in Millburn/Short Hills that has been on the market for a half a year. Bought two years ago and current seller just did their second price cut (at least). It is currently listed at below their purchase price. Please don’t tell anyone prices don’t go down in a correction. Plenty of homes peaked in the late eighties and it took those owners 10-12 years to break-even, even in very nice towns.
#27 Seneca says:
“It really is different in NJ.”
Another classic phase repeated in every bubble.
“This time it is different”.
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