Posted tagged ‘mortgage delinquencies’

Half of All Mortgages Going Underwater

August 20, 2009

From TechTicker:

underwater2One In Three Chance You’ll Soon Owe More Than Your House Is Worth

Foreclosure rates in the U.S. remain near record highs.  More than 13% of American homeowners with a mortgage are either behind on their payments or in foreclosure.  The latest report from the Mortgage Bankers Association, released today, shows the percentage of loans that entered the foreclosure process dipped slightly to 1.36%, down from an all-time high of 1.37% in the first quarter.

However, that number may soon rise again as mortgage delinquency rates continued to climb in the second quarter.

That news is no surprise to Karen Weaver of Deutsche Bank.  She startled everyone a few weeks ago when she predicted that, by 2011, nearly half of American mortgage holders would be underwater (meaning that they’ll owe more on their mortgages than their houses were worth).

Half of mortgage holders means about one-third of American households. Put another way, Weaver forecasts 25 million mortgage holders will be under water by 2011, up from an estimated 14 million currently.

Aside from the mega-bummer of owing the bank more than your house is worth, underwater mortgages exacerbate another problem: foreclosures.  In previous housing busts, being underwater led to a greater likelihood of default, and Weaver believes this the foreclosure problem will be much worse this time around.

In a recent report, Weaver analyzed all the various kinds of mortgages in the US and estimated that 48% of them would be underwater by 2011.  This includes “prime” borrowers, of whom a startling 41% will be underwater.

Delinquencies Hit Record High

August 20, 2009

AP reports record high mortgage delinquencies:

With the recession throwing thousands of people out of work daily, more than 13 percent of American homeowners with a mortgage have fallen behind on their payments or are in foreclosure.

The record-high numbers published Thursday by the Mortgage Bankers Association are being driven by borrowers with traditional fixed-rate mortgages, rather than the shady subprime loans with adjustable rates that kicked off the mortgage crisis. As of June, more than 4 percent of all borrowers were in foreclosure while about 9 percent had missed at least one payment.

And the layoffs keep coming. Lockheed Martin Corp. said this week it’s handing out about 800 pink slips in its space systems division, and audio conferencing company Polycom Inc. said it will cut about 80 positions.

New jobless claims rose last week to a seasonally adjusted 576,000, the Labor Department said Thursday. While the recession, measured by the nation’s total economic output, is likely over, most economists expect layoffs and foreclosure to keep rising for many months as companies remain in cost-cutting mode.

“Their confidence has been shattered,” said Brian Bethune, chief U.S. financial economist at IHS Global Insight. “They are going to be very conservative. They don’t want to be blind sided by a false dawn economy.”

Continue reading…

But the visual at ZeroHedge makes it all so painfully clear:

delinquent

But recovery is just around the corner. Can’t you see the green shoots and glimmers?