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1 in 10 holding mortgages missed payments, but foreclosures drop slightly from earlier this year

newhome2.jpg

(Photo Credit: Bloomberg)

By Frank Ahrens

Nearly 10 percent of all American homeowners with a mortgage had missed at least one payment this summer, threatening foreclosure, according to fresh data released moments ago by the Mortgage Bankers Association.

The percentage of mortgages somewhere in the foreclosure process during the second quarter of this year was 4.57 percent, down slightly from the first quarter number of 4.63 percent. However, the number is still up from where it was this time last year: 4.3 percent.

"When I'm asked, 'Are things getting better or worse?' my answer is like most things these days," Mortgage Bankers Association chief economist Jay Brinkmann said in a call today. "It is a combination of good news and not-so-good news. And there are areas of concern even with the good news."

Brinkmann reported small drops in several mortgage categories compared to the first quarter of this year: seriously delinquent loans, foreclosures and mortgages that are 90 days past due.

Those positive numbers are the result of three causes, Brinkmann said. The bad news: two of those three causes are going away.

As Brinkmann outlined it, in 2009, there was a drop in the number of mortgages that were one payment past due. Moving forward to this year, that means, the number of mortgages that are several payments past due has decreased. However, the association has seen a recent uptick in new delinquencies.

Second, a number of homes with distressed mortgages were sold thanks to the government homebuyer tax credit. But that ended at the end of April, and home sales naturally fell off.

Third, some of the mortgage-relief programs have worked; chiefly those engineered by banks in the private sector. Government efforts to prevent troubled homeowners from defaulting on their mortgages have had little effect. Earlier this week, it was reported that President Obama's signature mortgage-relief plan has nearly a 50 percent drop-out rate.

In sum, Brinkmann said the report reported "cautiously optimistic news" about the mortgage market. However, he said, it's all about the paycheck. And as long as unemployment remains near 10 percent, today's good news -- the slight decrease in distressed mortgages -- likely will be short-lived, he said.

The foreclosure data came out shortly after Freddie Mac released news that the rate for a 30-year fixed mortgage fell to another record low of 4.36 percent, its ninth drop in 10 weeks. Also this week, reports on existing and new homes sale came out and both were dismal, with sales of existing homes hitting their lowest level in 15 years.

By Frank Ahrens  |  August 26, 2010; 10:21 AM ET
Categories:  Housing  
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Next: In Jackson Hole, a laid-back retreat with some serious policymaking

Comments

It seems to me that Fannie Mae and government policy should enable those that are upside down in their loans but who are stilling makeing payments and are very willing to pay be able to refinance to the current market rates. In stead the policy is a refinance must meet collateral ratios even through there is not change in the collateral risk that already exist. A refinancing policy would reduce the capacity to pay risk and would not increase the collateral risk.

Posted by: Anonymous | August 26, 2010 11:44 AM | Report abuse

It seems to me that Fannie Mae and government policy should enable those that are upside down in their loans but who are stilling makeing payments and are very willing to pay be able to refinance to the current market rates. In stead the policy is a refinance must meet collateral ratios even through there is not change in the collateral risk that already exist. A refinancing policy would reduce the capacity to pay risk and would not increase the collateral risk.

Posted by: hfarmer2 | August 26, 2010 11:45 AM | Report abuse

The present mortgage crisis will not subside until the job problem is solved. People cannot pay for a home with unemployment compensation! Our president has failed to produce a proper climate for small businesses to hire again! The stimulus money given to banks has been squandered by the banks to invest in bonds and purchase debt to make money for the banks instead of lending. I am a homeowner who is current on my mortgage with little debt and cannot even get a bank to rewrite my mortgage without it costing me an arm and a leg! All these advertised low mortgage rates are phony, because no one except the very rich can get those rates! With Obama and Biden claiming the economy is improving, I would like them to prove it! A very few states have improved despite the failed policies, but 15% to 18% real unemployment rate and 10% of all mortgage holders being delinquent on their mortgages does not equal an improving economy! Obama, Biden, their economic team of Geitner and Summers must be removed from office ASAP! If not, America will be in for some awful tough times. Hopefully the American people will not be duped again by this slickmeister!!

Posted by: donn09 | August 26, 2010 12:15 PM | Report abuse

Wells Fargo committed prosecutable crime against us. We lost our home. Something is wrong with this picture. Here are the facts.

1. it is illegal for Wells Fargo to make mortgage loan to us based on hugely inflated appraisal.

Fact: - Wells Fargo's fraudulent appraisal valued our home at $718,000

- Wells Fargo's own review appraisal valued our home at $475,000

- Nevada Attorney General's office suspended the appraiser's license for committing appraisal fraud on our home.

- Nevada Appraiser Licensing Board mandated the appraiser to complete appraisal fraud course before regaining his real estate appraiser license.

- Nevada Revised Statue NRS 205.372 states that it's category C felony to make mortgage loans based on fraudulent appraisal.

- Cases of Attorney General's indictments against attorneys, loan brokers for teaming up make fraudulent loans to defraud homeowners.

2. it is illegal for Wells Fargo to wrongfully foreclose our home based on fraudulent appraisal and mortgage loan.

You can find all the facts on our website. www.wellsfargomortgagefraud.com

Posted by: Anonymous | August 26, 2010 1:58 PM | Report abuse


this is TheBabe talking and not Anonymous. I don't know what the heck is going on with COMMENTS' section of WaPo....
/////

Banks are loaning at 55%. That is too low. No one can get a re-fi or equity....
because their credit report looks very bad.

Well, it looks bad because everyone has had to stop paying their credit cards, to pay for the mortgage. Not to mention food, phone (one land line), cable (because we don't have free t.v. anylonger so it's not a luxury) - car insurance, if you are lucky enough to have a car that wasn't repossessed.

It is bad and the news isn't getting any better. 2011 is already in the toilet and we haven't even gotten there yet!!!!!!

Posted by: Anonymous | August 26, 2010 2:01 PM | Report abuse

My neighbor stopped paying and got his payments cut down -- his wife quit working for a few months. Now they pay half of what we pay and enjoy life.

Given such negotiating power, I'd assume 100% will miss payments ... not just 10% ...

Posted by: free_np | August 26, 2010 2:05 PM | Report abuse

This article is nothing more than lipstick on a pig as an even bigger problem with real estate is only now just beginning. A huge wave of boomers that bought into the fallacy that carrying mortgage debt into retirement made perfect financial sense now find themselves trapped in a depreciating and illiquid asset that will strain their finances for decades to come. Money that normally would have provided cash infusion into the consumption side of the economy, increasing growth rates and employment, now will remain prisoner to debt service.

Posted by: slim2 | August 26, 2010 2:06 PM | Report abuse

I charted Unemployment against Residential Foreclosures data. Look at how beautifully they are correlated since mid 2006:

http://www.hiddenlevers.com/hl/u?b9tm2b

Until the jobs situation improves, you can expect foreclosures to keep rising. Ahem, did I mention the job situation is getting worse?

Posted by: HiddenLevers | August 26, 2010 2:22 PM | Report abuse

Said free_np: "My neighbor stopped paying and got his payments cut down -- his wife quit working for a few months. Now they pay half of what we pay and enjoy life."

They won't be enjoying life so much when their credit reports show lots of late or non-payments over 90 days. Their FICO score in all 3 major credit reporting agencies will drop dramatically resulting in either an impossible scenario to get credit or at best extremely high interest rates on hard to get new credit offers and purchases. They might have excellent rates negotiating with revolving credit companies on legacy credit, but the best thing to do is (if you can) pay the minimum as well as negotiate. Negotiate means knowing what to say, who to send written correspondence to, who to talk to and what strategies you have such as transferring to other cards with lower rates, emergency funding and no-cost debt consolidation.

May of these negotiating tactics are unavailable to people with a poor credit history, especially recent history.

What terrible advice you gave by posting that! Idiot.


Posted by: Anonymous | August 26, 2010 2:24 PM | Report abuse

Sorry, just can't sympathize for all those that purchased homes they knew they wouldn't be able to afford when the interest reset a few yrs later. I sure wanted a nice big house in a nicer county, but I got what I could afford and haven't missed or been late on a payment in 7 yrs, have a little equity and credit is intact. Why do smart consumers have to keep footing the bill for irresponsible ones?

Posted by: Anonymous | August 26, 2010 3:17 PM | Report abuse

This economic recovery the mainstream media and Obama administation keep telling us that we are experiencing seems to be at odds with every indicator based on real numbers and actual reality. I know you want Obama to get credit for a recovery, but it seems that spending billions of dollars on worthless programs and black holes isn't actually working. But you keep churning out your silly nonsense and maybe people will start to be blinded and ignore the fact that things are getting worse and we haven't seen the bottom yet. The next foreclosure wave that is coming is the prime mortgages and commercial mortgages, and just wait till you see the fallout from that.

Does anybody eles find it odd that Obama refuses to focus on jobs?
If can't work, you can't pay your mortgage!

We are headed for a depression!

Posted by: Anonymous | August 26, 2010 3:35 PM | Report abuse

So 50% of all Government Mortgage modifications fell through? Gee, how's that Government Health plan sounding now, everybody???

Posted by: Anonymous | August 26, 2010 3:46 PM | Report abuse


Expect it to get worse and worse as long as Barry is in office.

Posted by: screwjob21 | August 26, 2010 3:48 PM | Report abuse

Didn't we get to miss one out of every ten house payments as part of the "Recovery Summer" celebration?

Posted by: richard36 | August 26, 2010 3:57 PM | Report abuse

Someone needs to get the Keynesians & Socialists in DC to believe in the free markets over Big Gov't - i.e. crony capitalism, malinvestments, market distortions, not allowing failed debt & markets to clear, waste, fraud & abuse of taxpayers and job creators alike cannot result in 'recovery'
Milton Friedman quotes:
'Concentrated power is not rendered harmless by the good intentions of those who create it.'
'Governments never learn. Only people learn'
'I am in favor of cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible.
'Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government.'
'The Great Depression, like most other periods of severe unemployment, was produced by government mismanagement rather than by any inherent instability of the private economy'
And what socialists and progressives and liberals Never understand:
"The most important single central fact about a free market is that no exchange takes place unless both parties benefit."
'The only way that has ever been discovered to have a lot of people cooperate together voluntarily is through the free market. And that's why it's so essential to preserving individual freedom'
'The problem of social organization is how to set up an arrangement under which greed will do the least harm, capitalism is that kind of a system'
'Underlying most arguments against the free market is a lack of belief in freedom itself.'

Posted by: Anonymous | August 26, 2010 3:58 PM | Report abuse

The question was asked: "Why do smart consumers have to keep footing the bill for irresponsible ones?"

Barney Frank would have the answer to that question. His knowledge in that area of finance is magical.

Posted by: richard36 | August 26, 2010 4:03 PM | Report abuse

When Democrats say "Recovery Summer," they mean "Obama Depression."


Posted by: Jerzy | August 26, 2010 4:07 PM | Report abuse

Said free_np: "My neighbor stopped paying and got his payments cut down -- his wife quit working for a few months. Now they pay half of what we pay and enjoy life."

They won't be enjoying life so much when their credit reports show lots of late or non-payments over 90 days. Their FICO score in all 3 major credit reporting agencies will drop dramatically resulting in either an impossible scenario to get credit or at best extremely high interest rates on hard to get new credit offers and purchases. They might have excellent rates negotiating with revolving credit companies on legacy credit, but the best thing to do is (if you can) pay the minimum as well as negotiate. Negotiate means knowing what to say, who to send written correspondence to, who to talk to and what strategies you have such as transferring to other cards with lower rates, emergency funding and no-cost debt consolidation.

May of these negotiating tactics are unavailable to people with a poor credit history, especially recent history.

What terrible advice you gave by posting that! Idiot.
------------------------
Nice big rant ... and sorry to break your dream sequence ... We pay double his payment and I'm yet to see my neighbor stop gloating about his mortgage reduction ... without any such dire consequences you have mentioned. May be you should take a stroll out in the real world!

Posted by: free_np | August 26, 2010 4:18 PM | Report abuse

the only time banks will modify a mortgage is when 1. the owner stops making payments and 2. the property is located where the prices are really depressed and sales are low. Banks and others throughout history who have been in the finance business, don't show any sympathies for anyone(not even there kit and kin) and its not going to change any time soon. People who have a hard time keeping up with mortgages should stop paying immediately and get rid of the stress.

Posted by: Anonymous | August 26, 2010 4:35 PM | Report abuse

A leading Republican economist criticized lawmakers Wednesday for trying to hold up a new report from the budget office he used to lead as evidence that the stimulus is working.

Amid a GOP push for President Obama to fire his economic team, a Congressional Budget Office report said the stimulus package created or saved up to 3.3 million jobs and boosted the gross domestic product by up to 4.5 percent.

House Speaker Nancy Pelosi pointed to the study Wednesday as proof that Democratic policies were turning the economy around and that millions of people would have been jobless if not for the Recovery Act.

But Douglas Holtz-Eakin, former CBO director, said the CBO analysis cannot be taken "at face value."

Posted by: Anonymous | August 26, 2010 4:46 PM | Report abuse

I was laid off. I have not been able to find a job. I have been bringing in some income with consulting work as an independent contractor. The consulting work is slowing down now. I'm still looking for employment. I have taken on an hourly retail job to supplement the consulting while I'm applying. I'll take on 3 part time jobs if I must.

I have made mortgage payments on time but anticipate difficulties in the near future. When I called the bank the first time, they said I would have to be over 90 days late before they could work anything out with me. I called the bank again. After over two hours on the phone, talking with 4 different people, the best comment I got was "you need to bring in some extra money on a monthly basis". I asked the rep if there was a job opening at the bank and I would gladly take it.

More phone calls, more statements of nothing could be done. So here I am....I want to stay in my home...I want to make the payments...but I'm stuck. Do I not pay my mortgage for the next 3 months and take a chance that they'll work something out with me? and take the chance they'll foreclose? Maybe I'll be as lucky as free_np's neighbor.

Posted by: CuckoosNest | August 26, 2010 4:54 PM | Report abuse

I don't think we are anywhere near the end of this mess. The banks have no idea on how many people are planning to just walk away from homes that are under water. In fact, there are financial advisers out there telling them to do exactly that. Banks are not responding well to loan modification requests and soon they will be holding more property on which they will loose big money. This is a national disaster caused by the liberals' fiscal policies, lack of government oversight (thanks, Barney Frank & Co,) and job losses.

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Posted by: allenbunny27 | August 27, 2010 4:02 AM | Report abuse

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