U.S. Mortgage Delinquencies reach a record high with 1 in 10 behind a payment

November 19, 2009 by · Leave a Comment
Filed under: Real Estate News 

This is not good news and the markets are not reacting to this news well.  The jobless claims remained unchanged at 505,000.  The New York Times pointed out that these delinquency numbers are being driven by changes in the employment numbers.  As long as we see these job numbers not improve or stay flat we are going to see more prime mortgages start to go into default.  Without income, you can not service debt and if you can’t service debt then you can’t keep current, let alone pay it off.

The “jobless recovery” is an inside joke and I am thinking that we are getting setup for a serious correction in markets that are being fueled by cheap money and artificially low interest rates that is forcing speculation.  Once we figure out what is happening and the recovery is more like a “head-fake” then better.  We need to cut spending, default bad debts, raise taxes and re-industrialize the country so we can start becoming the powerhouse we used to be.

New York Times – Nearly one in 10 homeowners with mortgages were at least one payment behind in the third quarter, the Mortgage Bankers Association said Thursday.  That is the highest figure since the association began keeping records in 1972. It is up from about one in 14 mortgage holders in the third quarter of 2008.

“Clearly the results are being driven by changes in employment,” Jay Brinkmann, the association’s chief economist, said on a conference call with reporters. Five million more unemployed people over the last year has turned into about two million more overdue loans, he added.

The association’s delinquency numbers do not include those who are actually in foreclosure, a figure that also rose sharply, to 4.47 percent of all loans. A year ago, it was 2.97 percent.  The combined percentage of those in foreclosure as well as delinquent is 14.41 percent, or about one in seven mortgage holders. About 52 million homeowners have mortgages.

In previous recessions, homeowners who lost their jobs could sell the house and move somewhere there were better prospects, or at least a cheaper lifestyle. This time around, many of the unemployed are finding that the value of their property is less than they owe. They are stuck.

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