U.S. Mortgage Delinquencies reach a record high with 1 in 10 behind a payment
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.
Popularity: 1%
Fannie Mae & Freddie Mac expand eligibility on home loan refinancing options
Honestly I see what is trying to be accomplished with this expansion of the acceptable loan-to-value amount to 125% of the home’s value. The goal of the program is to allow more people to refinance their home loan to a lower interest rate that will hopefully make it less likely the homeowner will default on the mortgage.
Instead, it is more likely going to set a “floor” in more home prices. This is actually preventing the market from reflecting the actual value of all these homes that are being refinanced through this government sponsored loan program. Yes, foreclosures are hard on the people being affected, there is no doubt in this. But on the other side you have to think about the people who are striving to own their own home. This in effect is artificially keeping prices higher than they would normally be without this intervention. That is counter-productive in the way it punishes people who did not get an regular mortgage over these more exotic loans that had a huge rate hike baked in the formula. Personally I would like to see less intervention and more market forces determining the outcomes of all these private contracts and agreements.
News (Reuters):
Mortgage finance companies Fannie Mae and Freddie Mac will expand efforts to prevent foreclosures by allowing refinancings by borrowers whose outstanding loans exceed the value of their homes by up to 25 percent, the Obama administration said on Wednesday.
Popularity: 2%
U.S. home mortgage applications fall almost 19% in June 2009
With interest rates creeping back up to previous levels, it is no surprise that refinance activity has slowed considerably as of late. In the article they state the the “5%” level is where the rates need to be for the market to maintain the activity that began when the government started aggressively pushing interest rates down to try and decrease the amount of defaults and foreclosure that have been associated with these sub-prime and Alt-A loans resetting to higher rates that are tied to the LIBOR or 10-year treasury bond.
News (Reuters):
U.S. mortgage applications plunged to a seven-month low last week as demand for home refinancing loans tumbled 30 percent, data from an industry group showed on Wednesday.
Popularity: 1%
U.S. 30-year mortgage rates fall to 6.47%
U.S. 30-year mortgage rates fell slightly in the latest week, according to a survey released on Thursday by home funding company Freddie Mac. U.S. 30-year mortgage rates dipped to an average of 6.47 percent from 6.52 percent last week, while 15-year mortgages dropped to an average of 6.0 percent from 6.07 percent last week.
Popularity: 1%