How many delinquencies are on new mortgages?
As Jamie Smith Hopkins reports, mortgage delinquencies keep rising and are now occurring in a huge way among borrowers who had been rated good credit risks. Just about every category of mortgages gone bad hit a new record in the third quarter, according to the Mortgage Bankers Association. Rising unemployment is a primary cause. "Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in GDP," chief economist Jay Brinkmann said in the MBA's press release.
One piece of data lacking in the survey is the vintage of the mortgages going bad -- ie., how long ago were they issued? It's relevant because even today, after all we've been through, there are reasons to question the lending standards on newly issued mortgages. Especially loans guaranteed by the FHA. As many have pointed out and as today's column notes, we're trying to solve a debt crisis by issuing more debt.
Federal Housing Administration-backed loans have soared in the last year, but the foreclosure rate on FHA loans has risen even higher! Says Brinkmann:
The foreclosure rate on FHA loans also increased, despite having a large increase in the number
of FHA-insured loans outstanding. The number of FHA loans outstanding has increased by about 1.1 million over the last year. This increase in the denominator depresses the delinquency and foreclosure percentages. If we assume these newly-originated loans are not the ones defaulting and remove the big denominator increase from the calculation results, the foreclosure rate would be1.76 percent rather than 1.31 percent reported.
"If we assume these newly-originated loans are not the ones defaulting..." That's a pretty big assumption.
Comments
I have never been late with a mortgage payment but may have to delay my December payment. I had a GMAC mortgage and just refinanced to another GMAC mortgage with a lower rate. Problem is GMAC took a payment out for my old mortgage and has not given it back to me yet. They claim they cannot mail the payment out for 3 weeks. Meanwhile my Dec 1 mortgage due date is rapidly approaching. Without the money that they erroneously took out of my account, I will not be making my mortgage payment. I am not going to be late on any credit cards or other expenses. I will pay them when and if they give me back my money. I will be calling them on Tuesday to follow up as the 3 weeks will be up by the end of today. As of this writing I cannot recommend GMAC. I am living on a tight budget, but I never thought I would be facing not being able to make my payment on time. If they did not take that extra $1200 I would be in good shape. Oh well!
Hey Gina. What a hassle. At least since it's the same mortgage company maybe you can get them to do something about it. I would harass the heck out of their representatives until they fix it. -- Jay Good luck!
Posted by: Gina | November 20, 2009 8:45 AM
Mr. Hancock,
Please remind your readers that if they are in financial trouble and late on their mortgage, then they need to seek the aid of a non-profit, state and/or HUD approved housing counseling agency. I work as a housing counselor in Baltimore City and strongly encourage all delinquent homeowners to seek assistance immediately. If you are late you are not alone; there are agencies available to help.
Posted by: Scott | November 20, 2009 9:55 AM
Gina- Also keep in mind that in most cases, while the mortgage bill says Dec 1, its actaully not due until Dec 15th.
Posted by: B | November 20, 2009 10:03 AM
What is the latest on Erickson? Will new IEDs be refunded in full on departure?
Posted by: Helen R Gross | November 20, 2009 11:15 AM
The key word is "JOBS"!!!! Until we have more jobs we will continue to spiral downward. Every day more and more Banks and Credit Unions are repossessing property from people who have lost jobs (see: http://www.repofinder.com). It's the economy, stupid.
Posted by: mike | November 20, 2009 4:08 PM
I think you're on the right track asking about the vintage of those mortgages in default. I thought fraud was rampant in the 06-07 loans, but I'm getting hints that the 08-09 batch is at least as bad. If no one is trying to prevent fraud, you're going to get a lot of fraud.
Posted by: ed ericson | November 20, 2009 7:58 PM
I would think we would find that relatively few new mortgages are in foreclosure. But if the market continues to still decline we may see this change. At the end of the day, if you get divorced or a job transfer and you are upside in your home what are you going to do? Write a check...most won't do this.
Posted by: Offer in Compromise | November 22, 2009 1:24 PM