* The overall mortgage delinquency rate surged to 7.88% in Q4 2008 from 6.99% in Q3 2008 and 5.82% a year earlier. This is yet another record high for the delinquency rate (the MBA data goes back to 1972).
* The subprime DQ rate climbed to 21.88% from 20.03% a quarter earlier and 17.31% a year earlier. The prime-only DQ rate rose to 5.06% from 4.34% in Q3 2008 and 3.24% a year earlier. Even prime fixed-rate loans, typically the best performing category, are deteriorating in quality — the DQ rate there climbed to 3.92% from 3.35% a quarter earlier. Subprime ARMs continue to be the biggest dogs in the kennel. The DQ rate there hit 24.22%, up from 21.31% a quarter prior.
* The percentage of mortgages entering the foreclosure process inched up to 1.08% from 1.07% a quarter earlier. That tied the record high set in Q2 2008. The overall percentage of mortgages in any stage of foreclosure jumped to 3.3% from 2.97% in Q3 2008.
* Regionally, delinquency rates were the highest in Mississippi (13.1%), Nevada (11.1%), Florida (11.09%), and Michigan (11.08%). North Dakota (3.56%) and Alaska (3.81%) fared the best.
The deterioration in U.S. mortgage performance continued apace at the end of 2008. The collapse in former bubble markets drove the first wave of delinquencies and foreclosures. Now, we’re experiencing a second, more powerful wave driven by sharp and widespread house price declines. Rising unemployment and the deepening recession are other key drivers of default.
The Obama administration has responded aggressively to combat the foreclosure crisis. It just launched an ambitious plan to modify more mortgages and allow more borrowers to refinance at lower rates, even if they’re slightly upside down on their homes. But previous foreclosure prevention efforts have had a spotty record, with many loan modifications simply postponing the inevitable. It remains to be seen whether the latest plan will suffer the same fate. I have some concerns about how it works, which I’ve laid out in more detail here.
Related posts:
- MBA Q1 delinquency and foreclosure rates rise to fresh records The Mortgage Bankers Association released data on first quarter mortgage delinquencies and foreclosures this morning. This is what the...
- MBA: Q2 delinquency and foreclosure rates rise again The Mortgage Bankers Association released data on second quarter mortgage delinquencies and foreclosures this morning. Here’s what we learned: *...
- MBA: Q3 mortgage performance deteriorates … again The Mortgage Bankers Association’s figures on home loan performance just keep getting worse and worse. Here is what things...
{ 3 comments… read them below or add one }
Why not extend the mortgages to 50, 60, 70 years…whatever it takes to make the monthly payment the person can afford…and then as their incomes rise…they can re-finance or pay additional principal. I took out my original loan in 1987 for 30 years…went to a 20…then a 15…and finally a 10 year loan as my income rose…my original mortgage is now paid off…
I don’t think we should be reducing principal. I would like my student loan principal reduced and every other stupid mistake I’ve made in my life bailed out. I am sick of the argument; it is good for the whole of the economy. Our instant gratification society needs to learn some hard knocks. You bought a house, an investment, at the height of the market, and now it lost value. That is what happens in free markets. Deal with it. There are no, and absolutely should not be, any guarantees. We will have to feel the pain for awhile, and that may be good for our society in the long run. I was taught, if you can’t afford it, you don’t buy it. I’m sick of the whole thing, and homeowners who irresponsibly bought more home than they could afford, or who took out a HELOC so they could buy gazillions of cars and other crap they don’t need, you are just as responsible as the lenders for this mess. I’m glad Obama is not helping more of them. I will be joining the tea parties, because I refuse to continue paying taxes to bail out irresponsible people. Grow up!!!!
“Unless and until you give borrowers an incentive to stick around … to ride out the tough times … by reducing their principal balances to levels that actually reflect some semblance of reality, you’re going to see many of these loan modifications fail.”
Simply put, bull. I agree with Lyn 100%. Why should people who made bad decisions be bailed out. What about responsibility for your own actions.
If someone was stupid enough to buy an overpriced home at the top of the bubble they should not be bailed out by the tax payers. And if the money comes from direct taxation or through tax by inflation it’s still someone else who will pay for there mistakes. Instead of passing this crap off as being good for the country they should call it what it is, welfare for people who made bad decisions. Perhaps some of the folks writing this dribble are hoping to be bailed out from there mortgages and therefore are some what biased in there opinions. I remember seeing a picture of one of these writers
standing in front of a new home bought at the top of the bubble and thinking, and this guy is writing for a newsletter that stresses financial safety. As for
“you’re going to see many of these loan modifications fail”
Well your right on that and that is excatly what needs to take place before this mess will ever have a chance of turning around.