First of all we need to understand that the situation is not as dire as all the Chicken Littles would have us believe. Less than 5% of all mortgages are delinquent, and less than 2% are in foreclosure.
It sounds so easy to blow off "less than 2%" as an insignificant number since there are about 48 Million Home Mortgages in America BUT...This puts that number in a bit of a different perspective.
Originally Posted by Article
Nearly 1.3 million homes—or more than one percent of all US households—were in some phase of foreclosure in 2007, according to year-end data released Tuesday by RealtyTrac, an online real estate marketer. The number of homes receiving default notices, auction sale notices and bank repossessions rose by 75 percent between 2006 and 2007, the web site reported, with foreclosure filings reaching 215,749 last month, up 97 percent from the previous December.
The report was one of a series issued in recent days, which detail the scale of the ongoing housing crisis in the US and its catastrophic impact on millions of working and middle class families.
Of the 1.3 million households receiving foreclosure notices last year, 405,000 saw their homes repossessed by the banks—a figure 51 percent higher than the 268,532 homes lost in 2006. This means, at a minimum, another 800,000 households, which received foreclosure notices last year are still facing the threat of having the banks put them out of their homes this year.
This is in addition to the 1 million to 2 million households that analysts predict could face foreclosure in 2008 and in the first half of 2009 when the “teaser” rates on their adjustable mortgages reset to market rates that could reach 11 to 13 percent.
The foreclosure crisis is affecting homeowners throughout the country. Nevada had the nation’s highest foreclosure rate, with 3.4 percent of households entering some stage of foreclosure last year. Foreclosures were filed against 34,417 properties, a 200 percent rise from 2006.
Gail Burks, head of the Nevada Fair Housing Center, a community group that aids homeowners facing foreclosure, said some neighborhoods in Las Vegas, Nevada’s biggest city, have as many as 40 percent of homes in foreclosure.
Florida had the second highest rate in the US, with 2 percent—or 165,291 households —in some stage of foreclosure. This was followed by Michigan—a state hard hit by the downsizing of the auto industry, with 1.9 percent of its households—or 87,210 homes—facing foreclosure. Michigan’s December total was up 275 percent from December 2006.
California, Colorado, Ohio, Georgia, Arizona, Illinois and Indiana all posted foreclosures rates in the nation’s top 10. In sheer numbers, California led the nation with 249,513 homes in foreclosure last year and 66,000 bank repossessions.
A report released Monday by real estate analyst First American Core Logic—based on data from 381 metropolitan areas in the US—concluded that the risk of foreclosure had jumped 22 percent over the last year. With the US economy entering or already in a recession, the report predicted, risk of foreclosure would continue to rise for at least the next 18 months. It noted that defaults continued to rise for two years after the end of the last recession in 2001.
The meltdown of the housing and mortgage industry led to the largest decline in home ownership rates on record last year, reversing a trend of rising ownership rates over the last 20 years, the US Census Bureau reported Tuesday. Homeowners accounted for 67.8 percent of occupied homes in the fourth quarter of 2006, down 1.1 points from a year earlier—the sharpest fall since the government agency began tracking figures in 1965.
Ownership rates hit a peak of 69.2 percent in the second and fourth quarters of 2004, when low interest rates and subprime loans were used to entice many first-time buyers into the market. With the bursting of the housing bubble and the tightening of lending restrictions, ownership rates have now fallen to the level that existed prior to the housing boom of 2003-2005.
“The vast majority of those switching to renting are foreclosures or those forced to sell because they can’t make the payment,” Dean Baker, co-director of the Center for Economic and Policy Research, told CNNMoney.com. “What’s really striking,” he continued, “is we should have seen a rise of ownership because of the demographics, with all the baby boomers entering their peak home ownership years. Instead, we’re seeing it fall quite a bit.”
New home sales also posted the largest drop on record last year, according to the Census Bureau. Sales fell to 774,000, down 26 percent from 1.05 million in 2006, the sharpest drop since the government began tracking the figures in 1963 and surpassing the 23 percent decline in the recession year of 1980. Some analysts predict new housing starts will slide another 30 percent by the end of 2008.
In the last quarter of 2007 a record 2.18 million homes—approximately a nine-month supply—sat vacant and available for sale, matching the record high reached in the year’s first quarter. This has devastated the home building industry, precipitating Tuesday’s announcement of the bankruptcy of Florida-based home-builder Tousa, massive losses for other housing-related companies and the loss of thousands of jobs, among carpenters and other building tradesmen.
What this means is that from 2006, when this started to 2009 when the ARM bump from this March finally washes the majority of Foreclosures from the last of the Sub-Prime mess, there will be a projected 5,500,000
Foreclosure actions taken. 2,600,000 have already occurred and there are 20 months to go.
The impact on housing values, tradesmen, entire economies is much more than the "less than 2%" figure that makes it sound like a minor cold. It is a massive failure of the system. And delinquency rates for standard mortgages are not "less than 5%". Mortgage Bankers Association put the end of 2007 number at 5.82% for STANDARD Mortgages and 17.31% for Sub-Prime Mortgages
Originally Posted by article
March 06, 2008
Mortgage Delinquency Still Rising
The Mortgage Bankers Association (MBA) released fourth quarter 2007 home mortgage and delinquency data today. Mortgage problems continue to worsen with no sign yet of relief. The national delinquency rate for all mortgages past due 30 days or more climbed to 5.82% from 4.95% a year earlier. It’s now the highest in 22 years. Subprime delinquency rocketed to 17.31%. MBA statistics on foreclosures were equally disheartening. More than 2% of mortgages are in foreclosure, the highest percentage by far since the MBA began counting in 1979. The rate of foreclosure starts in the fourth quarter was 0.83%, similarly an all-time high. An incredible 13.43% of subprime loans nationally are in foreclosure. In Michigan, 28% of subprime loans are seriously delinquent and 17% are in foreclosure. For Ohio, the percentages are 29% and 21%. Here in Illinois, it’s 22% and 15.8%.
In a separate report, the Federal Reserve announced that household net worth—in effect, the wealth of American citizens—declined by more than $500 billion. It was the first such decline since 2002.