Real Estate Loan Defaults
Real Estate Loan Defaults
We dive into new research just released by Goldman Sachs about the depth of the liquidity crisis at small domestically chartered banks, the banks that provide 45% of all residential mortgages.
The 2023 liquidity crunch is now roiling through the real estate market, speeding up the pace of the real estate crash, and has brought forth a wave of mortgage defaults amongst some of the largest Real Estate Investment Trusts and Funds in the business. Read more 
Home Mortgage Default Notices Move Up
home mortgage defaults
Over 100,000 homes were seized by lenders in September, a record number that may decline in coming months as major banks halt repossessions and review foreclosure practices.
MDA DataQuick said Tuesday there were nearly 83,300 default notices filed in California from July through September.
That’s down about 26 percent from about 111,700 during the same period in 2009.
The latest tally is up about 19 percent from almost 70,100 default notices filed from April through June.
It is sharply lower, however, than the peak of more than 135,400 notices filed when defaults peaked in the first quarter of 2009.
Nevada had the highest foreclosure filing rate for the 16th straight quarter. One in every 29 households got a notice, almost five times the national average. A total of 38,429 Nevada homes received filings, down 20 percent from a year earlier.
Arizona had the second-highest rate for the fifth straight quarter. One in 55 households, three times the national average, got a filing. Florida ranked third with one in 56 households and California was fourth at one in 70, RealtyTrac said.
Modified Mortgage Default Rate is Sky-High
home mortgage defaults
The government has spent BILLIONS to lenders, loan serveries, and salaries of administrative staff in an effort to help troubled homeowners. Actually, it seems like a new or modified government real estate assistance program for ‘under-water’ homeowners is announced every month. So, what has all the effort and money gotten us?
The sad fact is the re-default rate within a year is likely to be 65% to 75% under the Obama administration’s Home Affordable Modification Program, or HAMP, according to a report to be released Wednesday by Fitch, a New York-based credit-rating firm. Read more
Homeowners Who Don’t Pay Mortgages Create A Substantial Boost To Consumer Spending
California home mortgage defaults
It appears the economy has received a boost from practices that let some homeowners stop paying their mortgages and use the ‘extra’ money elsewhere.
Almost everyone is aware of, or knows, someone living rent-free in their home for an extended period of time, having stopped paying their mortgage. Many of these free boarders are spending lavishly on non-essentials. Read more
Why Defaulting On Your Mortgage May Be Best
housing market
In an academic paper titled, “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis,†written by Brent White, a law school professor at the University of Arizona argues that those who are underwater in their loans should just leave.
By leaving, it could potentially save them thousands and it won’t be long until they recuperate themselves. Defaulting “strategically†can pull more walkaways by buying all the major items they may need in the near future such as a car or even a house right before you take a hike. As long as you stay current with other mortgage lenders, one could potentially have a good credit standing in 2 years.
Also, many believe that signing a contract with your mortgage is for life, but contrary to popular belief, mortgage lenders have either no legal rights or limited rights to pursue walkaways.
Federal Housing Administration (FHA) In Trouble
FHA home mortgage defaults
With recent reports that 20% of mortgages guaranteed by the Federal Housing Administration (FHA) in 2007 and 2008 are defaulting, it appears that the corner of the carpet that things are being swept under might have changed but that the sweeping is still going on. Proof that lessons were not learned is shown by similar default rates for the period of 2005-2006 (20%) when the bubble seemed to have gained its own inertia and was sucking mortgages in instead of having to have them pumped out.
In addition to the losses tied to the eventual defaults on the mortgages it guaranteed, the FHA is also suffering from mortgages it invested in. Write downs on $1.04BN in the value of private-label MBS, the kind not backed by any GSE, resulted in the booking of a $165MM loss on these types of securities by the FHA in 3Q09; a veritable one-two punch that will, once again, have the taxpayer being dragged from the ring.
Sorrento Valley real estate agent
So Much For The Bailout
Wall street voices its opinion of the Government bailout. First it was the Government cash taxpayer rebate. Then we had a Government housing bailout effective October 1, 2008. Then, in a third step, the Government bailout program known as the "rescue bill," signed into law on October 5, 2008.
During the three business days after the latest bailout bill was voted on, Wall Street & all other world marketssaw huge declines. Note the Dow Jones Index chart shown below:
Now, Obama is already proposing another bailout plan. I would suggest that just like the Rocky movies, we name these new bills, bailout #1, bailout #2, bailout #3 … It would be much easier to reference these different bills if each was numbered.
I venture to say that somewhere around bailout #4 or #5 (the P.C. name of the next bill will most likely be "The neighborhood village revitalization Act") we will finally see the Government's real end-game: Behind on your home payments? Not to worry, we will rewrite your loan to the new depreciated value of your home and reduce your interest rate to today's rate. Plus, we will extend the 30 year term to 60 years to lower your monthly payments. If you cannot make your new drastically reduced payments, just pay what you can and we'll make up the difference by again extending your payback period beyond the sixty year term. Did I hear anyone say 100-year home mortgages?
Naturally, you can keep the new speedboat and SUV you purchased with your original home equity loan.