Conservatorship has been good for Fannie Mae and Freddie Mac, but
the companies continue to drain federal resources away from other
government operations, according to the regulator of the mortgage
giants. In its third annual letter to Congress, the Federal
Housing Finance Agency (FHFA ) said stronger loan underwriting
standards enabled the companies to narrow losses in 2010 to $28
billion from $93.6 billion a year earlier. The companies have
received more than $160 billion funding from the Treasury
Department the past few years. "Since being placed under
conservatorship in 2008, Fannie Mae and Freddie Mac remain
critical supervisory concerns," said Edward DeMarco, acting
director of the FHFA. This is a "result of continuing credit
losses in 2010 from loans originated during 2005 through 2007 as
well as forecasted losses from loans originated during that
time." Still, DeMarco said governmental control allowed the
companies to "accomplish their statutory mission of facilitating
stability and liquidity for single-family and multifamily housing
finance."
The FHFA said Fannie and Freddie remain plagued by "credit risk,
operational risk, modeling risks and retention of qualified
leadership and personnel." The companies hold a 60% share of
single-family loan production. As conservator, the FHFA is
tasked with minimizing credit losses at the GSEs, and DeMarco
said more stringent underwriting standards and a stronger price
structure have helped. "Although past business decisions leading
to these losses cannot be undone, each enterprise, under the
oversight and guidance of FHFA as conservator and regulator, has
improved underwriting standards for loan purchases in the past
two years.," he said. "Another way FHFA minimized losses was to
require the enterprises to enforce existing contractual
representation and warranty loan repurchase agreements with
lenders." The FHFA also oversees the dozen Federal Home Loan
Banks and said all 12 reported profits in 2010. Loans to the
banks dropped to $479 billion last year from $631 billion at the
end 2009. The regulator said the banks' financial condition and
performance stabilized in 2010, but several continue "to be
negatively affected by their exposure to private-label
mortgage-backed securities."
Tuesday, June 14, 2011
Thursday, June 9, 2011
The Labor Department says 422,000 Americans filed for their first
week of unemployment benefits the week ended May 28. While that
marked a 6,000 decrease from the revised 428,000 initial claims
filed the week before, it was worse than economists' expectations
for 413,000 claims. Economists use initial jobless claims as a
way to gauge the strength of the job market, but for the last
eight weeks, the number has stayed stubbornly high above the
400,000 mark. Even in times of robust economic growth, it's not
uncommon to have initial claims tally in the 200,000 to 300,000
range. But many economists say once that number is persistently
in the 400,000s, job growth is probably too weak to put a dent in
the unemployment rate.
The number of Americans filing for ongoing claims fell 1,000 to
3,711,000 in the week ended May 21, the latest data available.
Wisconsin, South Carolina, Massachusetts and California had the
largest increases in initial claims during that week, citing
layoffs in the services industry. Alabama and Oregon saw the
biggest improvement. Next up is the government's monthly jobs
report due Friday. Economists surveyed by CNNMoney say they're
expecting to see that 170,000 jobs were created in May and that
the unemployment rate eased to 8.9% from 9% in April.
week of unemployment benefits the week ended May 28. While that
marked a 6,000 decrease from the revised 428,000 initial claims
filed the week before, it was worse than economists' expectations
for 413,000 claims. Economists use initial jobless claims as a
way to gauge the strength of the job market, but for the last
eight weeks, the number has stayed stubbornly high above the
400,000 mark. Even in times of robust economic growth, it's not
uncommon to have initial claims tally in the 200,000 to 300,000
range. But many economists say once that number is persistently
in the 400,000s, job growth is probably too weak to put a dent in
the unemployment rate.
The number of Americans filing for ongoing claims fell 1,000 to
3,711,000 in the week ended May 21, the latest data available.
Wisconsin, South Carolina, Massachusetts and California had the
largest increases in initial claims during that week, citing
layoffs in the services industry. Alabama and Oregon saw the
biggest improvement. Next up is the government's monthly jobs
report due Friday. Economists surveyed by CNNMoney say they're
expecting to see that 170,000 jobs were created in May and that
the unemployment rate eased to 8.9% from 9% in April.
Tuesday, May 31, 2011
why should we care about foreclosures?
"Earlier this week, when we got the report of a bump up in sales
of newly constructed homes, I cautioned that the home builders
are still facing huge competition from distressed properties
(foreclosures and short sales). Today we have some new numbers
showing just how big and how widespread that competition is.
Foreclosed properties made up 28% of all home sales nationwide in
the first quarter of this year, according to RealtyTrac. That's
up slightly from Q4 of 2010, but not the record 29% we saw a year
ago. More than 107,000 bank-owned (REO) properties sold, which is
actually a drop from the previous quarter and a bigger drop (36%)
from a year ago. Foreclosed properties sold at a 35% discount to
their non-distressed counterparts.
So here we have fewer selling but making up a larger share of
total sales. That's not particularly healthy. We need to get more
of these properties sold, because as I showed you on the blog
Tuesday, there are hundreds of thousands of them and millions
more in the potential pipeline. This is not exactly news, but
every time I report it I get the argument back here on the blog
that these distressed sales are only happening in certain states
and don't affect the overall housing market. There is some truth
to that, at least the first part. I asked RealtyTrac to pull some
other numbers for me to show what I'm talking about. More than
three quarters of all distressed sales (78%) were in just ten
states. You can see the usual suspects, California, Florida,
Arizona, Nevada and much of the Mid-West. That's a problem for
the builders because so much of their most recent inventory is in
those states. But what about the rest of us? It begs two
questions: 1) If I don't live in these states, why should I care?
2) If the worst is only in a few states, then why are home prices
falling nationwide?
Here's RealtyTrac's Rick Sharga's explanation: 'The 10 states
include several of the states with the highest number of overall
home sales; driving prices down in California and Florida has
much more impact on national averages than fluctuating home
prices in Alaska and Wyoming. It's not all about geography.
While foreclosure sales obviously depress the price of homes
nearby, they also affect prices by limiting new home sales, which
typically help drive home prices up. But foreclosure sales are
only one of the factors behind falling home prices. Weak demand
is probably the biggest driver.'
And I contend that weak demand is driven by several factors, not
the least of which are credit and confidence. The banks are
looking at their overall book of business and the losses they're
still taking; the losses are concentrated in those states that
are continuing to suffer the most. Regardless, they spread that
pain nationwide in their lending standards, tightening up to the
point that many borrowers far far away from California can't get
a loan. Confidence, or lack thereof, is a bigger factor than we
often give it credit. Yes, the big bad media report all these
numbers, and yes, some of the worst of it is nowhere near where
you live, but you see and process it. It affects your confidence
and consequently how you act.
Housing demand is nowhere near where it should be, and the mix of
what is selling is all on the low end. Investors with cash and
first time home buyers are bargain hunting, and that pushes the
price average/median down in every market. As prices fall on real
sales, thousands of borrowers fall underwater on paper...on their
mortgages, and that puts them at higher risk of foreclosure.
'Residential home sales fell by 18% in Q1 2011 compared to Q4
2010 and by almost 32% from Q1 2010,' notes Sharga. Foreclosures
and distressed sales, even if they're not in your back yard or in
your state, affect your home's value because they affect the
overall demand for your home."
of newly constructed homes, I cautioned that the home builders
are still facing huge competition from distressed properties
(foreclosures and short sales). Today we have some new numbers
showing just how big and how widespread that competition is.
Foreclosed properties made up 28% of all home sales nationwide in
the first quarter of this year, according to RealtyTrac. That's
up slightly from Q4 of 2010, but not the record 29% we saw a year
ago. More than 107,000 bank-owned (REO) properties sold, which is
actually a drop from the previous quarter and a bigger drop (36%)
from a year ago. Foreclosed properties sold at a 35% discount to
their non-distressed counterparts.
So here we have fewer selling but making up a larger share of
total sales. That's not particularly healthy. We need to get more
of these properties sold, because as I showed you on the blog
Tuesday, there are hundreds of thousands of them and millions
more in the potential pipeline. This is not exactly news, but
every time I report it I get the argument back here on the blog
that these distressed sales are only happening in certain states
and don't affect the overall housing market. There is some truth
to that, at least the first part. I asked RealtyTrac to pull some
other numbers for me to show what I'm talking about. More than
three quarters of all distressed sales (78%) were in just ten
states. You can see the usual suspects, California, Florida,
Arizona, Nevada and much of the Mid-West. That's a problem for
the builders because so much of their most recent inventory is in
those states. But what about the rest of us? It begs two
questions: 1) If I don't live in these states, why should I care?
2) If the worst is only in a few states, then why are home prices
falling nationwide?
Here's RealtyTrac's Rick Sharga's explanation: 'The 10 states
include several of the states with the highest number of overall
home sales; driving prices down in California and Florida has
much more impact on national averages than fluctuating home
prices in Alaska and Wyoming. It's not all about geography.
While foreclosure sales obviously depress the price of homes
nearby, they also affect prices by limiting new home sales, which
typically help drive home prices up. But foreclosure sales are
only one of the factors behind falling home prices. Weak demand
is probably the biggest driver.'
And I contend that weak demand is driven by several factors, not
the least of which are credit and confidence. The banks are
looking at their overall book of business and the losses they're
still taking; the losses are concentrated in those states that
are continuing to suffer the most. Regardless, they spread that
pain nationwide in their lending standards, tightening up to the
point that many borrowers far far away from California can't get
a loan. Confidence, or lack thereof, is a bigger factor than we
often give it credit. Yes, the big bad media report all these
numbers, and yes, some of the worst of it is nowhere near where
you live, but you see and process it. It affects your confidence
and consequently how you act.
Housing demand is nowhere near where it should be, and the mix of
what is selling is all on the low end. Investors with cash and
first time home buyers are bargain hunting, and that pushes the
price average/median down in every market. As prices fall on real
sales, thousands of borrowers fall underwater on paper...on their
mortgages, and that puts them at higher risk of foreclosure.
'Residential home sales fell by 18% in Q1 2011 compared to Q4
2010 and by almost 32% from Q1 2010,' notes Sharga. Foreclosures
and distressed sales, even if they're not in your back yard or in
your state, affect your home's value because they affect the
overall demand for your home."
Tuesday, March 15, 2011
Hacker claims BOA hid mortgage errors
A hacker organization known as Anonymous released on Monday a series of e-mails by a former Bank of America (BOA) employee who claims they show how a division of the bank hid foreclosure information. The bank unit, Balboa Insurance, which deals in force-placed coverage, was acquired by BOA when it bought the mortgage lender Countrywide in 2008, and the e-mail messages involve removing information linking loans to certain documentation. The e-mails dating from November last year reveal a correspondence among Balboa employees in which they move to hide the record of certain documents "that went out in error." The documents were tied to loans by GMAC, a BOA client, according to the e-mails. "The following GMAC DTN's need to have the images removed from Tracksource/Rembrandt," an operations team manager at Balboa wrote. DTN refers to document-tracking number, and Tracksource/Rembrandt is an insurance-tracking system.
The response he receives: "I have spoken to my developer and she stated that we cannot remove the DTN's from Rembrandt, but she can remove the loan numbers, so the documents will not show as matched to those loans." Removing the loan numbers from the documents, according to the e-mails, was approved. A member of Anonymous said in an interview Monday that the purpose of his Web site was to bring attention to the wrongdoing of the banks. "The way the system is, it's made to cheat the average person," he said. A BOA spokesman told Reuters on Sunday that the documents had been stolen by a former Balboa employee, and were not tied to foreclosures. "We are confident that his extravagant assertions are untrue," he told the news service.
The response he receives: "I have spoken to my developer and she stated that we cannot remove the DTN's from Rembrandt, but she can remove the loan numbers, so the documents will not show as matched to those loans." Removing the loan numbers from the documents, according to the e-mails, was approved. A member of Anonymous said in an interview Monday that the purpose of his Web site was to bring attention to the wrongdoing of the banks. "The way the system is, it's made to cheat the average person," he said. A BOA spokesman told Reuters on Sunday that the documents had been stolen by a former Balboa employee, and were not tied to foreclosures. "We are confident that his extravagant assertions are untrue," he told the news service.
Friday, February 25, 2011
Obama tries to force mortgage deal
WSJ - Obama tries to force mortgage deal
The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America's largest banks to pay for reductions in loan principal worth billions of dollars. Terms of the administration's proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won't be borne by investors who purchased mortgage-backed securities, these people said. If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers, these people said. But forging a comprehensive settlement may be difficult. A deal would have to win approval from federal regulators and state attorneys general, as well as some of the nation's largest mortgage ser
vicers, including Bank of America Corp., Wells Fargo & Co, and J.P. Morgan Chase & Co. Those banks declined to comment.
So far, most loan modifications have focused on shrinking monthly payments by lowering interest rates and extending loan terms. Banks, as well as mortgage giants Fannie Mae and Freddie Mac, have been shy to embrace principal reductions, in part due to concerns that many borrowers who can afford their loans will stop paying in the hope of being rewarded with a smaller loan. Several federal agencies have been scrutinizing the nation's largest banks over breakdowns in foreclosure procedures that erupted last fall. Last week, the Office of the Comptroller of the Currency said only a small number of borrowers had been improperly foreclosed upon. But the regulator raised concerns over inadequate staffing and weak controls over certain foreclosure processes.
A settlement must satisfy an unwieldy mix of authorities, including state attorneys general and regulators such as the newly formed Bureau of Consumer Financial Protection, who support heftier fines. They must also appease banking regulators, such as the OCC, that are concerned penalties could be too stiff. "Nothing has been finalized among the states, and it's our understanding that the federal agencies we are in discussions with have not finalized their positions," said a spokesman for Iowa Attorney General Tom Miller, who is spearheading a 50-state investigation of mortgage-servicing practices.
The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America's largest banks to pay for reductions in loan principal worth billions of dollars. Terms of the administration's proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth, people familiar with the matter said. The cost of those writedowns won't be borne by investors who purchased mortgage-backed securities, these people said. If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers, these people said. But forging a comprehensive settlement may be difficult. A deal would have to win approval from federal regulators and state attorneys general, as well as some of the nation's largest mortgage ser
vicers, including Bank of America Corp., Wells Fargo & Co, and J.P. Morgan Chase & Co. Those banks declined to comment.
So far, most loan modifications have focused on shrinking monthly payments by lowering interest rates and extending loan terms. Banks, as well as mortgage giants Fannie Mae and Freddie Mac, have been shy to embrace principal reductions, in part due to concerns that many borrowers who can afford their loans will stop paying in the hope of being rewarded with a smaller loan. Several federal agencies have been scrutinizing the nation's largest banks over breakdowns in foreclosure procedures that erupted last fall. Last week, the Office of the Comptroller of the Currency said only a small number of borrowers had been improperly foreclosed upon. But the regulator raised concerns over inadequate staffing and weak controls over certain foreclosure processes.
A settlement must satisfy an unwieldy mix of authorities, including state attorneys general and regulators such as the newly formed Bureau of Consumer Financial Protection, who support heftier fines. They must also appease banking regulators, such as the OCC, that are concerned penalties could be too stiff. "Nothing has been finalized among the states, and it's our understanding that the federal agencies we are in discussions with have not finalized their positions," said a spokesman for Iowa Attorney General Tom Miller, who is spearheading a 50-state investigation of mortgage-servicing practices.
Existing homes sales up
Existing homes increased 2.7 percent to a seasonally adjusted annual rate of 5.36 million in January from a downwardly revised 5.22 million in December, and are 5.3 percent above the 5.09 million level in January 2010. This is the first time in seven months that sales activity was higher than a year earlier. A parallel NAR practitioner survey2 shows first-time buyers purchased 29 percent of homes in January, down from 33 percent in December and 40 percent in January 2010 when an extended tax credit was in place. Investors accounted for 23 percent of purchases in January, up from 20 percent in December and 17 percent in January 2010; the balance of sales were to repeat buyers. All-cash sales rose to 32 percent in January from 29 percent in December and 26 percent in January 2010. All-cash purchases are at the highest level since NAR started measuring these purchases monthly in October 2008, when they accounted for 15 percent of the market. The average of all-cash deals was
20 percent in 2009, rising to 28 percent last year.
The national median existing-home price3 for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes edged up to a 37 percent market share in January from 36 percent in December; it was 38 percent in January 2010. Total housing inventory at the end of January fell 5.1 percent to 3.38 million existing homes available for sale, which represents a 7.6-month supply4 at the current sales pace, down from an 8.2-month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply. Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.69 million in January from 4.58 million in December, and are 4.9 percent higher than the 4.47 million level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7 percent from a year ago.
Existing condominium and co-op sales increased 4.7 percent to a seasonally adjusted annual rate of 670,000 in January from 640,000 in December, and are 7.9 percent above the 621,000-unit pace one year ago. The median existing condo price5 was $154,900 in January, which is 10.2 percent below January 2010. Regionally, existing-home sales in the Northeast fell 4.6 percent to an annual pace of 830,000 in January from a spike in December and are 1.2 percent below January 2010.
The median price in the Northeast was $236,500, which is 4.0 percent below a year ago. Existing-home sales in the Midwest rose 1.8 percent in January to a level of 1.14 million and are 3.6 percent above a year ago. The median price in the Midwest was $126,300, which is 3.2 percent below January 2010. In the South, existing-home sales increased 3.6 percent to an annual pace of 2.02 million in January and are 8.0 percent higher than January 2010. The median price in the South was $136,600, down 2.1 percent from a year ago. Existing-home sales in the West rose 7.9 percent to an annual level of 1.37 million in January and are 7.0 percent above January 2010. The median price in the West was $193,200, down 5.7 percent from a year ago.
20 percent in 2009, rising to 28 percent last year.
The national median existing-home price3 for all housing types was $158,800 in January, down 3.7 percent from January 2010. Distressed homes edged up to a 37 percent market share in January from 36 percent in December; it was 38 percent in January 2010. Total housing inventory at the end of January fell 5.1 percent to 3.38 million existing homes available for sale, which represents a 7.6-month supply4 at the current sales pace, down from an 8.2-month supply in December. The inventory supply is at the lowest level since December 2009 when there was a 7.3-month supply. Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.69 million in January from 4.58 million in December, and are 4.9 percent higher than the 4.47 million level in January 2010. The median existing single-family home price was $159,400 in January, down 2.7 percent from a year ago.
Existing condominium and co-op sales increased 4.7 percent to a seasonally adjusted annual rate of 670,000 in January from 640,000 in December, and are 7.9 percent above the 621,000-unit pace one year ago. The median existing condo price5 was $154,900 in January, which is 10.2 percent below January 2010. Regionally, existing-home sales in the Northeast fell 4.6 percent to an annual pace of 830,000 in January from a spike in December and are 1.2 percent below January 2010.
The median price in the Northeast was $236,500, which is 4.0 percent below a year ago. Existing-home sales in the Midwest rose 1.8 percent in January to a level of 1.14 million and are 3.6 percent above a year ago. The median price in the Midwest was $126,300, which is 3.2 percent below January 2010. In the South, existing-home sales increased 3.6 percent to an annual pace of 2.02 million in January and are 8.0 percent higher than January 2010. The median price in the South was $136,600, down 2.1 percent from a year ago. Existing-home sales in the West rose 7.9 percent to an annual level of 1.37 million in January and are 7.0 percent above January 2010. The median price in the West was $193,200, down 5.7 percent from a year ago.
Thursday, February 24, 2011
MBA - foreclosures up delinquencies down
The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 8.22% of all loans outstanding as of the end of the fourth quarter of 2010, a decrease of 91 basis points from the third quarter of 2010, and a decrease of 125 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 46 basis points to 8.93% this quarter from 9.39% last quarter. The percentage of loans on which foreclosure actions were started during the fourth quarter was 1.27%, down seven basis points from last quarter and up seven basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.
The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.63%, up 24 basis points from the third quarter of 2010 and up five basis points from one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.57%, a decrease of 13 basis points from last quarter, and a decrease of 110 basis points from the fourth quarter of last year. The combined percentage of loans in foreclosure or at least one payment past due was 13.56% on a non-seasonally adjusted basis, a 22 basis point decline from 13.78% last quarter.
Jay Brinkmann, MBA's chief economist said "These latest delinquency numbers represent significant, across the board decreases in mortgage delinquency rates in the US. Total delinquencies, which exclude loans in the process of foreclosure, are now at their lowest level since the end of 2008. Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession. Perhaps most importantly, loans three payments (90 days) or more past due have fallen from an all-time high delinquency rate of 5.02% at the end of the first quarter of 2010 to 3.63% at the end of the fourth quarter of 2010, a drop of 139 basis points or almost 28% over the course of the year. Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible."
"While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner. Despite continued high levels of unemployment, the economy did add over 1.2 million private sector jobs during 2010 and, after remaining stubbornly high during the first half of 2010, first time claims for unemployment insurance fell during the second half of the year. Absent a significant economic reversal, the delinquency picture should continue to improve during 2011, Brinkmann said.
Mike Fratantoni, MBA's vice president for single family research said "While the foreclosure starts rate fell during the fourth quarter, the percentage of loans in foreclosure rose to equal the all-time high. The foreclosure inventory rate captures loans from the point of the foreclosure referral to exit from the foreclosure process, either through a cure (perhaps through a modification), a short sale or deed in lieu, or through a foreclosure sale. As we predicted last quarter, the percentage of loans in the foreclosure process increased in the fourth quarter, largely due to the foreclosure paperwork issues that were being addressed in September and October. These issues caused a temporary halt in foreclosure sales, particularly in states with judicial foreclosure regimes, such as New Jersey, Florida, and Illinois.
With fewer loans exiting the foreclosure process through sales, the foreclosure inventory rate naturally increased, even as fewer foreclosure starts meant that fewer loans entered the foreclosure process in the fourth quarter." "The share of loans in foreclosure in California and Florida combined was 36.0%, a decrease from 37.3% in the third quarter, and 39.3% a year ago. Over 24% of the loans in Florida are one payment or more past due or in the process of foreclosure, the highest rate in the nation, followed by Nevada at over 22%, compared to an average of 13.6% for the nation. Only eleven states saw an increase in their foreclosure start rate with Maryland seeing the largest increase."
The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.63%, up 24 basis points from the third quarter of 2010 and up five basis points from one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 8.57%, a decrease of 13 basis points from last quarter, and a decrease of 110 basis points from the fourth quarter of last year. The combined percentage of loans in foreclosure or at least one payment past due was 13.56% on a non-seasonally adjusted basis, a 22 basis point decline from 13.78% last quarter.
Jay Brinkmann, MBA's chief economist said "These latest delinquency numbers represent significant, across the board decreases in mortgage delinquency rates in the US. Total delinquencies, which exclude loans in the process of foreclosure, are now at their lowest level since the end of 2008. Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession. Perhaps most importantly, loans three payments (90 days) or more past due have fallen from an all-time high delinquency rate of 5.02% at the end of the first quarter of 2010 to 3.63% at the end of the fourth quarter of 2010, a drop of 139 basis points or almost 28% over the course of the year. Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible."
"While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner. Despite continued high levels of unemployment, the economy did add over 1.2 million private sector jobs during 2010 and, after remaining stubbornly high during the first half of 2010, first time claims for unemployment insurance fell during the second half of the year. Absent a significant economic reversal, the delinquency picture should continue to improve during 2011, Brinkmann said.
Mike Fratantoni, MBA's vice president for single family research said "While the foreclosure starts rate fell during the fourth quarter, the percentage of loans in foreclosure rose to equal the all-time high. The foreclosure inventory rate captures loans from the point of the foreclosure referral to exit from the foreclosure process, either through a cure (perhaps through a modification), a short sale or deed in lieu, or through a foreclosure sale. As we predicted last quarter, the percentage of loans in the foreclosure process increased in the fourth quarter, largely due to the foreclosure paperwork issues that were being addressed in September and October. These issues caused a temporary halt in foreclosure sales, particularly in states with judicial foreclosure regimes, such as New Jersey, Florida, and Illinois.
With fewer loans exiting the foreclosure process through sales, the foreclosure inventory rate naturally increased, even as fewer foreclosure starts meant that fewer loans entered the foreclosure process in the fourth quarter." "The share of loans in foreclosure in California and Florida combined was 36.0%, a decrease from 37.3% in the third quarter, and 39.3% a year ago. Over 24% of the loans in Florida are one payment or more past due or in the process of foreclosure, the highest rate in the nation, followed by Nevada at over 22%, compared to an average of 13.6% for the nation. Only eleven states saw an increase in their foreclosure start rate with Maryland seeing the largest increase."
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