Home Foreclosures and Unemployment
home foreclosures
Job loss and reduced income are the top reasons that many U.S. homeowners are facing foreclosure, according to a recent report by NeighborWorks America, which administers the National Foreclosure Mitigation Counseling (NFMC) program. The report finds that 54 percent of U.S. homeowners who received foreclosure counseling through the program were facing foreclosure because of job-related reasons.
Home Mortgage Problems Increase
home mortgage problems
In Q409, the amount of mortgages falling behind by 90 or more days increased 21.1%, resulting in more foreclosures ahead, according to a study from the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS). The OCC and the OTS report covers nearly 34 million loans totaling $6trn in principal balances, representing 64% of all outstanding mortgages in the US. Overall mortgage performance declined for the seventh consecutive quarter, as 86.4% of the mortgages studied were current and performing at the end of Q409.
Home Foreclosure Reality
home foreclosures
ForeclosureRadar says it now takes an average of 229 days for a bank to foreclose on a home in California after sending a notice of default, up from 146 days in August 2008.
RealtyTrac notes that the number of loans in which the borrower hasn’t made a payment in 90 days or more but is not in foreclosure is at 5.1% nationally, a record high. Read more 
Why Many Home Loan Modifications Are Never Approved
It’s the old story… If you want to find the real reason behind major institutional activity, FOLLOW THE MONEY! This video suggests certain banks have NO INCENTIVE to refinance troubled mortgages & don’t care at what price a property is sold.
Some say the largest inaccuracy in this video is that the public paid for the loss the FDIC covered. Further, FDIC losses are covered by their own funds which are collected from members. So, it’s really insurance; you pay a premium and they cover you if something bad happens. The claim is that the FDIC is NOT funded by the public…
Sacramento attorneys
Loan Delinquency Rates Have Surpassed 10 Percent
home loan delinquencies
A recently released report, showed that home loan delinquency rates in the U.S. have now surpassed 10 percent. Factoring in foreclosures in process, for one huge mortgage database, the total non-current rate sits at 13.3 %. When extrapolated to reflect the entire mortgage industry, this rate indicates that more than 7.2 million mortgage loans are now behind on payments. In addition, an estimated one million properties are now owned by banks. The January 2010 Mortgage Monitor report is an in-depth summary of mortgage industry performance indicators based on data collected as of December 31, 2009. Read more
San Diego Homes – WHEN IT PAYS TO LET THEM FORECLOSE!
www.brokerforyou.com
A recent research report from the University of Chicago’s Booth School of Business and Northwestern University’s Kellogg School of Management reports that of the large number of mortgage defaults across the country, 26% were what they call strategic. This report defines strategic as one in which the mortgage default was a calculated, done by homeowners who have the money to make the payments. The owners decided that the homes negative equity position indicates to them it would be economically wiser to let the property go back to the lender.
According to another nationwide study, 22% of all homeowners had negative equity positions during the first quarter of 2009. This means the homeowners owed more on their mortgage, than the current resale value of their homes. In some parts of Southern California, Nevada and Florida, it’s speculated that more than half of all homeowners now have negative equity.
Currently, we are just beginning of prime adjustable-rate loan activity called mortgage resets. The number of these mortgage resets far exceeds the number of subprime loans. The findings from Northwestern University’s study seem to indicate that the U.S. housing market is on the brink of another substantial rise in home foreclosures.
Keep in mind, that these are prime loans made to the middle and upper end of the housing market. The people can afford to make the reset payments on their mortgages. A main reason that these people can afford the new reset payments is because of today’s low interest rates hovering at around just 5%. In a post, dated 1-20-09, titled ‘San Diego Negative Home Equity’ on my San Diego real estate market blog, I speculated about this exact situation. The post was well in advance of this study’s findings and all the more prophetic today.
I believe the importance of the mortgage reset will wake up homeowners to the harsh reality, and extent, of their negative equity position. Will they want to keep making mortgage payments? Would you, if the current value of your home was $50,000 less than the balance of your mortgage? What if your home value was $100,00, $200,000 or even $300,000 less than the balance on your mortgage? Would you continue to make payments or let the bank take it over?
I recently sold only in La Jolla. That was purchased new in 2005 for approximately $1.6 million. My buyer, was able to buy this home for just $1.1 million. So, in just about three years, from the time this home was purchased, the original seller’s home value had declined by $500,000, or just over 31%. Now just imagine if this home was originally purchased with a 10% down payment. The original owner would have had $160,000 invested in the property at the start. Plus would have made three years of substantial monthly mortgage payments, plus upgrades and then found out that his original $160,000 equity position had deteriorated into a -500,000 position. Now, should the original purchaser, with the loan balance of $1,440,000 continue to make mortgage payments or let the bank take the property back?
In the Northwestern University study, among those without moral reservations, 63% of those homeowners with a negative equity of $300,000 or more would let the property go into foreclosure. For the other group in the study who had moral issues with letting their home go into foreclosure, if they could make the payments, 38% would let their properties foreclose if their negative equity position reached $300,000.
Another finding in the study showed that the higher number of foreclosures in the zip code, the higher the homeowners’ willingness to walk away from their properties. Plus, 82% of homeowners in the study were likely to have a strategic default when they were aware of others who had defaulted.
The bottom line from this study seems to show that the traditional assumptions that homeowners default on their mortgages because they can’t afford their monthly payments, needs to be re-examined. Even with the new Fannie Mae and Freddie Mac 125% refinance mortgages, will these deep in negative equity homeowners really be enticed to refinance their homes, when financially, it looks like a foolish decision?