10% Of Homeowners Behind In Payments Or In Foreclosure
By Justin Gardner | Related entries in Business, Economy, Housing, Money
Some more “depressing” statistics come out on the heels of the massive jobless claims last month.
The share of mortgages 30 days or more overdue rose to a seasonally adjusted 6.99 percent while loans already in foreclosure rose to 2.97 percent, both all-time highs in a survey that goes back 29 years, the Mortgage Bankers Association said in a report today. The gain in delinquencies was driven by an increase of loans with payments 90 days or more overdue.“Until we see a turnaround in the job situation, we’re not going to see these numbers improve,†said Jay Brinkmann, chief economist of the Washington-based bankers group, in an interview. “We’re seeing more loans build up in the 90-days bucket as lenders work to modify loans and states put in place programs that delay foreclosures.†[...]
New foreclosures fell to 1.07 percent from 1.08 percent in the second quarter as some states enacted laws to temporarily stop home repossessions and lenders increased efforts to modify the terms of loans, Brinkmann said.
Understandably, home sales are dropping like a rock, as are home values…
Purchases of existing homes in October slid to an annual rate of 4.98 million, lower than forecast, the National Association of Realtors said in a Nov. 24 report. The median price fell 11.3 percent from a year earlier, the most since the group began collecting data in 1968.
The funny thing is it’s a reasonably good time to buy because it’s a buyer’s market, but just make sure you’re first and foremost buying a home for shelter and secondly for the tax incentives.
Long story short, the days of buying a home because it’s a good investment are over for the foreseeable future.
This entry was posted on Friday, December 5th, 2008 and is filed under Business, Economy, Housing, Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
December 5th, 2008 at 4:15 pm
It’s a buyer’s market, but the days of buying a home “because it’s a good investment” are over??? What an oxymoronic statement!!
I’d revise your last statement to say that the days of buying a house (not a “home”, but a “house”) that you can’t afford because you are speculating that you can do a little remodeling to and then flip it a couple of months later for an overinflated price to make as a get-rich-quick scheme are over for the foreseeable future.
Secondly, I’d like to know what the percentage of homes in that are in, or are approaching foreclosure, broken out to show the foreclosure rate for conventional vs subprime mortgages.
In other words, what is the foreclosure rate for people who could actually afford their payments? I’d bet it is FAR less than 10% for conventional mortgages and WAY OVER 10% for subprime mortgages.
Everyone should expect a higher rate of default on mortgages when the applicants have no $$ for a downpayment, buy bigger houses than they can afford or otherwise don’t qualify for conventional mortgages.
The whole mess is the fault of government MANDATING that banks lend to unqualified people (community reinvestment act, etc.). If the people would not have been given mortgages that they could not afford, we would not be in this mess. Now everyone is expecting the same govenment that created this mess to fix it all?? Unbelieveable!!
December 5th, 2008 at 5:34 pm
Kudos to Rich the previous poster. This headline should read, “Thank God, only 10% of the population…”.
December 5th, 2008 at 6:10 pm
[...] wonder 10% of homeowners are behind on the mortgage. [...]
December 5th, 2008 at 6:16 pm
No, it’s not.
Right now people can buy a home at a decent price because the market has begun to bottom out, but they shouldn’t expect its value to go up.
As far as %s go, I don’t have that for you. And yes, I bet you’re right that subprime mortgages have a higher rate of foreclosure, but I wouldn’t assume there’s a vast gap. After all, you yourself talk about the speculation market and those people bought dozens of homes and tried to flip them. The ironic part is they can renegotiate the terms of their loans so they can keep their homes. Individual home owners can’t.
One last note, to blame this entire thing on the government is not only unfair, it’s also not accurate. I suggest you go to Wikipedia and read about the subprime crisis and the community reinvestment act to get a clear view of what happened.
December 5th, 2008 at 9:19 pm
It’s amazing how fast being fired can turn a regular loan into a “neosubprime” loan. I notice that Rich doesn’t discuss this aspect of our new economy.
December 6th, 2008 at 1:21 pm
Jim,
I haven’t been able to figure out what a “neosubprime” loan is, although I did read a little about “neoprime” loans….and I don’t quite know what that has to do with the point I was trying to make.
I was simply wanting to know if the percentage of conventional mortgages in foreclosure had spiked, and to what degree. I suspect that a higher percentage of subprime foreclosures, which a reasonable person would expect, is driving the “all-time highs in a survey that goes back 29 years”, as quoted.
Justin,
You said, “Right now people can buy a home at a decent price because the market has begun to bottom out, but they shouldn’t expect its value to go up.”
If the market is bottoming out, doesn’t that mean that values should start to rise in the relatively near future? If they don’t, then it hasn’t “bottomed out” yet. If you look at a *home* as a long term investment and not a get-rich-quick scheme, as I stated previously, then they will see a nice return on that investment over the next decade or two.
I would not call the property owned by “the speculation market and those people bought dozens of homes and tried to flip them” *homes*. People do not own dozens of “homes”. I know a few people who own dozens of “houses” or “properties” that they rent or otherwise purcahse as investments, but they did it responsibly. The speculators took a risk, it paid off for a while, then it fell apart on them. Too bad, so sad. Why should I, as a taxpayer, shoulder the burden of thier losses when I did not benefit from thier previous profits?
Is the goverment 100% responsible? No, I don’t think so, and I didn’t intend to imply that it was. But the Fed and Treasury, along with their congressional oversight should’ve seen this freight train coming a long time ago. Fools like Barney Frank (and others) made statements a year ago that there is no problem, nothing to see here, keep moving along….now they need >$700 billion to fix a problem that wasn’t there a year ago?? Do you really think this crisis completely blindsided them?? They had, at least, an inkling that there was a problem and they did NOTHING to try to minimize the damage.
Really….quoting Wikipedia as an indisputable source on economics? I look things up in Wiki that are trivial – info on my favorite rock band and such. Not to “hang my hat” on a debate of more import, such as this. See, I generally try to gather several points of view, then try to decide for myself what the real story is. You know the old saying – three sides to every story…? However, I will take a look at it. Heritage Foundation has some good information…Personally, I’d trust it more that Wiki!
Lastly, I do feel for the INDIVIDUALS who played by the rules, purchased homes responsibly and are now in a crunch because they lost jobs, had their hours reduced (like me), or are otherwise experiencing financial difficulty. I do think they should have avenues to recieve some kind of assistance so they can keep their *homes* from going into foreclosure.
December 6th, 2008 at 2:29 pm
My reference to a neosubprime loan was simply to the fact that a loan that was not subprime can rapidly become subprime with a job loss. So it is a newly subprime loan.