Some Delinquency Measures Increase in Latest MBA National Delinquency Survey

WASHINGTON, D.C. (December 13, 2006) —  The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 4.67 percent of all loans outstanding in the third quarter of 2006 on a seasonally adjusted (SA) basis, up 28 basis points from the second quarter, and up 23 basis points from one year ago, according to MBA’s National Delinquency Survey.

The increase was driven by increases in delinquencies for all major loan types, most notably for subprime and FHA loans. Delinquency rates for prime, subprime, and FHA loans increased on a seasonally adjusted basis relative to the second quarter.

The percentage of loans in the foreclosure process was 1.05 percent of all loans outstanding at the end of the third quarter, an increase of six basis points from the second quarter of 2006, while the SA rate of loans entering the foreclosure process was 0.46 percent, three basis points higher than the previous quarter. Compared with the third quarter of 2005, the percentage of loans in the foreclosure process was up eight basis points while the percentage of loans entering the foreclosure process was up five basis points. This quarter’s NDS results cover over 42.6 million loans (32.6 million prime loans, 5.8 million subprime loans and 4.2 million government loans).

“The housing market continued to normalize in the third quarter of 2006. Although labor markets remain strong, the pace of job growth has slowed, as has the home price appreciation rate which has decreased in response to higher interest rates and rising inventories of unsold homes.  Some states experienced home price declines in the third quarter, and a few have experienced declines over the past six months,” said Doug Duncan, MBA’s Chief Economist and Senior Vice President of Research and Business Development.

“As we had expected, in the third quarter delinquency rates increased across the board.  However, increases in delinquency rates were noticeably larger for subprime loans, particularly for subprime ARMs.  This is not surprising given that subprime borrowers are more likely to be susceptible to the cumulative increases in rates we’ve experienced, and the slowing of home price appreciation that has resulted. It is important to remember that delinquency and foreclosure rates have been quite low the last two years. “

Some context for these results are emphasized by four points:

1) First, the market is working.  In response to mortgage payment performance that has deteriorated somewhat from the very strong performance of recent years, investors have demanded higher returns in the form of wider credit spreads, particularly for loans originated in the second half of 2006.  These price signals from the capital markets directly and immediately impact the rates that mortgage lenders can offer to borrowers, in this case particularly to borrowers with blemished credit.  The result of these adjustments in the capital markets will be that risk-adjusted returns will be equalized across segments of the market.  Far from being a problem, these clear market signals will help the market to more efficiently regain its equilibrium.

2) Second, this widening of credit spreads in the secondary markets passes back through to new borrowers in the form of higher rates.  This means lenders reduce credit to less creditworthy or subprime borrowers first.

3) Third, we have no evidence that the increases we have seen in delinquency and foreclosure rates are the result of non-traditional products such as interest-only or payment-option mortgages.  These products have made up a significant portion of originations in recent quarters.  However, we do not have and are not aware of information that would indicate significant deterioration in performance related to the non-traditional products.

4) Finally, given the first three points, we would strongly caution policymakers to avoid any regulatory or legislative actions that would impede the ability of the market to respond to changes in underlying economic conditions.  An important role of public policy should be to facilitate efficient markets, as these will ultimately benefit consumers.

“We  expect the housing market to fully regain its footing in the middle of 2007.  In the meantime, we anticipate some further increases in delinquency and foreclosure rates in the quarters ahead,” said Duncan.

Change from last quarter (second quarter of 2006)

All adjustable rate (ARM) as well as fixed rate (FRM) loans had higher SA delinquency rates compared to the second quarter of 2006. The SA delinquency rate for prime ARMs increased 36 basis points (from 2.70 percent to 3.06) and the rate for prime FRM loans increased ten basis points (from 2.00 to 2.10 percent). The SA delinquency rate for the subprime FRM loans increased 35 basis points (9.23 percent to 9.56 percent), whereas the rate for subprime ARMs increased 98 basis points (12.24 percent to 13.22 percent).

The SA delinquency rate increased during the third quarter for all loan types.  The delinquency rate increased 15 basis points for prime loans (from 2.29 percent to 2.44 percent), increased 86 basis points for subprime loans (from  11.70 percent to 12.56 percent), increased 35 basis points for FHA loans (from  12.45 percent to 12.80 percent), and increased 23 basis points for VA loans (from 6.35 percent to 6.58 percent).

During the third quarter of 2006, the foreclosure inventory rate increased across the range of loans.  The foreclosure inventory rate increased three basis points for prime loans (from 0.41 percent to 0.44 percent), 30 basis points for subprime loans (from 3.56 percent to 3.86 percent), eight basis points for FHA loans (from 2.20 percent to 2.28 percent), and two basis points for VA loans (from 1.10 percent to 1.12 percent).

By loan type, the percent of new foreclosures increased one basis point for prime loans (from 0.18 percent to 0.19 percent), three basis points for subprime loans (from 1.79 percent to 1.82 percent),  four basis points for FHA loans (from 0.75 percent to 0.79 percent) and decreased three basis points for VA loans (from 0.35 to 0.32 percent).

In the third quarter of 2006, the percent of loans that were seriously delinquent, which is defined as the non-seasonally adjusted (NSA) percentage of loans that are 90 days or more delinquent or in the process of foreclosure, was 2 percent, 11 basis points higher than for the second quarter of 2006. This measure is designed to account for inter-company differences on when a loan enters the foreclosure process.

Change from last year (third quarter of 2005)

Since the third quarter of 2005, the SA delinquency rate increased for prime loans, subprime loans and FHA loans, while decreasing for VA loans.  The delinquency rate increased ten basis points for prime loans, 180 basis points for subprime loans, and five basis points for FHA loans, whereas the delinquency rate fell 54 basis points among VA loans.

Compared with the third quarter of 2005, the delinquency rate increased 76 basis points for prime ARM loans and 267 basis points for subprime ARM loans. The delinquency rate decreased one basis point for prime fixed loans, while the delinquency rate for subprime fixed loans increased 80 basis points.

The percentage of loans in the foreclosure process increased for all loan categories except VA since the third quarter of 2005, which increased three basis points for prime loans, 55 basis points for subprime loans, and three basis points for FHA loans.  Among VA loans, the percentage of loans in foreclosure decreased seven basis points since the third quarter of 2005.

Over the course of the year, the SA percentage of new foreclosures increased one basis point for prime loans and 43 basis points for subprime loans.  The percentage of new foreclosures decreased seven basis points for VA loans and decreased by nine basis points for FHA loans.

State and Regional

Across all loan types, the states with the highest overall delinquency rates were Mississippi (11.05 percent), Louisiana (9.50 percent) and Michigan (6.68 percent). Based on foreclosure inventory rates across all loan types, the top three states were Ohio (3.32 percent), Indiana (2.90 percent) and Michigan (2.20 percent). All state level results are not adjusted for seasonal effects.
The states with the largest increase in overall delinquency rate in the past year were Michigan (135 basis points), Rhode Island (128 basis points), and Ohio (96 basis points). The states with the largest increase in foreclosure inventory rate were Michigan (59 basis points), Rhode Island (46 basis points), and Maine (43 basis points).
From the third quarter of 2005, 44 out of 51 states saw their delinquency rate increase, while 35 states saw an increase in the foreclosure inventory rate.

At the regional level, the Northeast region had an overall SA delinquency rate of 4.39 percent, the North Central region had a delinquency rate of 5.44 percent, the South had a delinquency rate of 5.37 percent and the West had a delinquency rate of 2.81 percent, compared to the national rate of 4.67. For the foreclosure inventory rate, the Northeast region had a rate of 1.06 percent, the North Central region had a rate of 1.89 percent, the South had a rate of 0.99 percent and the West had a rate of 0.49 percent, compared to the national foreclosure inventory rate of 1.05 percent of all loans.

Underscoring the need for more homeownership counseling, the study participants generally thought that many residents might avoid foreclosure if they were better educated about default and delinquency prevention.

According to the studys findings,“Too many foreclosed properties remain vacant, leading to vandalism and increased costs of rehabilitation for re-occupancy. Some out-of-state buyers of foreclosed properties are inexperienced and unfamiliar with mainetenance and management responsibilities.”

DSNews.Com Default Servicing In Print and Online – Formerly REO Magazine

homeowner counseling,homeowner education

To that end, the Department will soon initiate a review of Fannie Mae and Freddie Mac investments and holdings, including certain equity and debt investments, with a focus on transactions classified on their financial statements as ‘other assets/other liabilities.’

HUD’s primary concern is whether the GSEs’ investment activities are consistent with their charter authorities and public purposes and whether each is using the profits it derives as a government-sponsored enterprise for the purposes intended.

Freddie Mac,Fannie Mae,HUD

They “will pay up to 1.5%* of your purchase price in closing costs, for all offers presented between May 1, 2006 – September 29, 2006″ and “with escrow closed by November 17, 2006″. The closing cost credit can’t exceed the actual closing costs, so a buyer with only 1 percent closing costs would get a 1 percent credit.

Agents and buyers will also want to take note of one very important requirement:

In order to receive the closing cost discount, or to redeem a bonus certificate, the selling agent must mention the certificate at the initial Offer Negotiation with HomeSteps, or bonus will not be valid.

For full details of the promotion and to sign up for the closing cost or agent bonus coupon, visit the Homesteps Full House webpage. [Popup window]

Homesteps,Freddie Mac

Foreclosures were filed on 1,200 properties, 25 percent higher than the year before and 63 percent higher than February 2004. Compared to January of this year, foreclosures increased nearly 12 percent, with Middlesex County posting a 29 percent increase.

Boston Business Journal: Bay State home foreclosures hit three-year high – 2006-04-04

“We’re looking at con artists. What they are doing is one of the evilest cons I’ve ever seen,” said Illinois Attorney General Lisa Madigan.

Madigan filed a lawsuit Wednesday that says Willis lost her home through fraud.

“They’re essentially stealing people’s homes and they’re stealing the equity that people have, as well,” Madigan said.

NBC5.com – News – Mortgage Scam Leaves Family Homeless

scam,mortgage fraud,foreclosure scam

“This is the third straight month the U.S. foreclosure rate has moved higher, and it’s the second straight month new foreclosures have topped 100,000,” said James J. Saccacio, chief executive officer of RealtyTrac. “However, several states, including California, Florida, Texas and New York, reported a dip in foreclosures in February. We’ll see if the rest of the country follows that trend in March.”

foreclosure,foreclosures

RealtyTrac Inc. :: National Foreclosures Increase 13 Percent in February According to RealtyTrac(TM) U.S. Foreclosure Market Report

IRVINE, Calif., March 22 — RealtyTrac(TM) (http://www.realtytrac.com/), the leading online marketplace for foreclosure properties, today released its February 2006 Monthly U.S. Foreclosure Market Report, which shows 117,259 properties nationwide entered some stage of foreclosure in February, a 13 percent increase from the previous month and a 68 percent increase from February 2005. The report shows a February national foreclosure rate of one new foreclosure for every 986 U.S. households.

RealtyTrac publishes the largest national database of pre-foreclosure and foreclosure properties, with more than 600,000 properties from over 2,500 counties across the country, and is the foreclosure data provider to MSN Real Estate, Yahoo! Real Estate and AOL Real Estate.

“This is the third straight month the U.S. foreclosure rate has moved higher, and it’s the second straight month new foreclosures have topped 100,000,” said James J. Saccacio, chief executive officer of RealtyTrac. “However, several states, including California, Florida, Texas and New York, reported a dip in foreclosures in February. We’ll see if the rest of the country follows that trend in March.”

Georgia posts highest foreclosure rate for second straight month

Georgia reported 9,421 properties entering some stage of foreclosure in February, a 28 percent increase from the previous month and more than twice the number of new foreclosures reported in February 2005. With one foreclosure for every 329 households, the state documented the nation’s highest state foreclosure rate for the second month in a row.

Foreclosure rates in Indiana and Colorado were among the nation’s five highest for the second month in a row. Indiana reported 5,909 properties entering some stage of foreclosure in February, a 34 percent increase from the previous month and nearly three times the number of new foreclosures reported in February 2005. Colorado reported 4,128 properties entering some stage of foreclosure, a 10 percent increase from the previous month and a 34 percent increase from February 2005. Both Indiana and Colorado documented foreclosure rates that were more than two times the national average.

Michigan and Ohio also documented foreclosure rates among the nation’s five highest thanks to increasing foreclosures in February. Michigan reported 10,343 properties entering some stage of foreclosure, more than twice as many as were reported the previous month and one new foreclosure for every 408 households. Ohio reported 9,873 properties entering some stage of foreclosure, a 19 percent increase from the previous month and one new foreclosure for every 484 households.

States with most new foreclosures

Texas recorded the most new foreclosures of any state for the third month in a row despite a month-to-month decrease of 7 percent. The state reported 13,616 properties entering some stage of foreclosure in February, a foreclosure rate of one new foreclosure for every 591 households. Although the state’s foreclosure rate dropped out of the nation’s five highest, it was still 1.7 times the national average.

Florida reported 10,019 properties entering some stage of foreclosure in February, a 3 percent decrease from the previous month and a 20 percent decrease from February 2005. The state’s foreclosure rate of one new foreclosure for every 729 households was 1.4 times the national average.

The RealtyTrac Monthly U.S. Foreclosure Market Report provides a graphical map that illustrates foreclosure percentiles by state (appended to this press release or available by request), as well as the total number of homes in some stage of foreclosure nationwide and by state over the preceding month. Data is also available at the individual county level. RealtyTrac’s report includes properties in all three phases of foreclosure: Pre-foreclosures — Notice of Default (NOD) and Lis Pendens (LIS); Foreclosures — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank).

Below are foreclosure market statistics nationwide and by state:

%Change
1 in from
every previous
State Name NODs NTSs NFSs LISs REOs Total #households month
US 2/2006 20759 38839 2423 10554 44684 117259 986 13
Alabama 1 58 0 0 21 80 24543 -22
Alaska 4 56 0 0 14 74 2773 -24
Arizona 107 1973 0 0 83 2163 1012 7
Arkansas 16 589 0 0 501 1106 1061 -17
California 6869 2079 0 0 162 9110 1341 -3
Colorado 1967 463 0 0 1698 4128 443 10
Connecticut 897 21 0 0 31 949 1460 899
Delaware 1 7 0 0 11 19 18056 -47
District
of Columbia 0 2 0 0 5 7 39264 0
Florida 0 0 1421 7850 748 10019 729 -3
Georgia 1 5997 0 0 3423 9421 329 28
Hawaii 19 36 0 0 0 55 8373 62
Idaho 48 119 0 0 113 280 1878 5
Illinois 1735 108 0 0 2726 4569 1070 1
Indiana 1362 1240 0 0 3307 5909 427 34
Iowa 0 12 0 0 347 359 3433 -6
Kansas 0 24 0 0 137 161 7006 -33
Kentucky 260 49 0 0 157 466 3757 -24
Louisiana 1 45 0 0 52 98 19216 -20
Maine 0 3 0 0 6 9 72432 -59
Maryland 0 247 0 0 25 272 7877 -53
Massachusetts 10 342 0 0 18 370 7086 538
Michigan 27 3219 0 0 7097 10343 408 121
Minnesota 8 244 0 0 121 373 5544 87
Mississippi 0 38 0 0 58 96 13217 41
Missouri 18 389 0 0 1802 2209 1103 76
Montana 2 84 0 0 6 92 4479 8
Nebraska 79 11 0 0 139 229 3138 -37
Nevada 677 1047 0 0 37 1761 493 -2
New Hampshire 0 6 0 0 2 8 68378 -38
New Jersey 2456 384 0 0 438 3278 1010 -6
New Mexico 604 247 0 0 60 911 857 36
New York 0 0 896 2704 995 4595 1671 -12
North
Carolina 497 153 0 0 2545 3195 1102 33
North Dakota 0 0 0 0 10 10 28967 -71
Ohio 0 2841 0 0 7032 9873 484 19
Oklahoma 356 297 0 0 993 1646 908 -4
Oregon 158 273 0 0 306 737 1975 5
Pennsylvania 876 1393 0 0 2113 4382 1198 5
Rhode Island 1 3 0 0 0 4 109959 33
South
Carolina 103 211 106 0 548 968 1811 18
South Dakota 0 12 0 0 9 21 15391 -32
Tennessee 9 1514 0 0 3126 4649 527 27
Texas 109 11023 0 0 2484 13616 591 -7
Utah 858 113 0 0 215 1186 648 27
Vermont 0 1 0 0 1 2 147191 -86
Virginia 0 226 0 0 59 285 10127 -41
Washington 10 1493 0 0 505 2008 1191 30
West Virginia 0 43 0 0 17 60 14077 -36
Wisconsin 613 103 0 0 344 1060 2172 166
Wyoming 0 1 0 0 16 17 13168 31

Calls to most Metro Detroit firms result in a voice message saying someone will try to get back to you in five business days.

The crush is not hard to explain. Home foreclosures are soaring throughout Metro Detroit and Michigan amid high unemployment, overtime cutbacks and budget-busting bills for everything from gasoline to groceries. Wayne County ended January with more than 3,300 homes in active foreclosure — the highest of any county in the nation, according to statistics compiled by Foreclosure.com of Boca Raton, Fla.

Foreclosure business booms – 03/20/06 – The Detroit News

Detroit,foreclosure,field service

‘One-Size-Fits-All’ Policy Adjusted to Reflect Local Levels of Damage

MCLEAN, Va., Feb. 13 /PRNewswire/ — Freddie Mac announced it is extending
its foreclosure suspension until May 31, 2006 in 21 counties and parishes in
Alabama, Louisiana, Mississippi and Texas that suffered the most severe damage
due to hurricanes Katrina and Rita. At the same time, Freddie Mac said it
would lift the moratorium on foreclosures in areas that experienced the least
damage. The announcement was made in a February 10 Guide Bulletin sent to
Freddie Mac’s Seller/Servicers.
“We are replacing our one-size-fits-all approach with a zone approach,”
explained Janet Eakes, senior vice president of Freddie Mac’s operations
division. “Our servicers have done an outstanding job helping borrowers with
Freddie Mac owned loans in the immediate aftermath of the storms. Today’s
announcement builds on our commitment and on our servicers’ commitment to
continue to provide relief to borrowers in the worst disaster areas while
resuming normal business operations elsewhere.”
According to the February 10 Guide Bulletin, the zone approach divides the
119 Gulf Coast counties covered by last year’s foreclosure moratorium into
three separate zones and applies appropriate policies to each. Specifically,

* Freddie Mac is extending its foreclosure moratorium through May 31 in
Zone 3, which includes the 21 counties and parishes in federally
designated disaster areas where Federal Emergency Management Agency
individual assistance is available;

* Freddie Mac is requiring servicers to obtain Freddie Mac’s prior
approval before initiating a foreclosure in Zone 2, which includes 34
counties and parishes with less severe damage;

* Freddie Mac is lifting its blanket foreclosure moratorium in Zone 1,
the remaining 64 counties where there was no or minimal storm damage.

Freddie Mac, however, is strongly encouraging servicers to extend mortgage
relief to borrowers with Freddie Mac loans on a case-by-case basis regardless
of zone. Freddie Mac authorizes servicers to provide a wide range of mortgage
relief to storm victims, including forbearance for up to one year from the
date of the disaster. (Freddie Mac mortgage relief options are described in
the “Owning and Keeping a Home” section on freddiemac.com.)
The February 10 Guide Bulletin instructs servicers to help borrowers
strengthen their credit reputations by reporting timely mortgage payments to
credit reporting agencies as they bring their mortgages current. Until then,
the bulletin reminds servicers not to report storm-related forbearances or
bankruptcies to credit bureaus and to waive prepayment premiums for storm
victims in some cases.
For more information, lenders can contact their Freddie Mac Account
Representative or review the February 10 Guide Bulletin at
http://www.freddiemac.com/sell/guide/bulletins.

Freddie Mac Zone Designations by County/Parish

State Zone One Zone Two Zone Three

AL Greene, Hale, Pickens, Choctaw, Marengo. Baldwin,
Sumter, Tuscaloosa. Clarke, Mobile,
Washington.

LA Allen, East Baton Ascension, Assumption, Calcasieu,
Rouge, East Feliciana, Acadia, Beauregard, Cameron,
Evangeline, Iberville, Iberia, Jefferson Jefferson,
Lafayette, Livingston, Davis, Lafourche, St. Orleans,
Pointe Coupee, Sabine, Charles, St. Helena, Plaquemines,
St. Landry, Vernon, St. James, St. John St. Bernard,
West Baton Rouge, The Baptist, St. St. Tammany.
West Feliciana. Martin, St. Mary,
Tangipahoa, Terrebonne,
Vermilion, Washington.

MS Adams, Amite, Attala, Clarke, Greene, George, Hancock,
Choctaw, Claiborne, Forrest, Jasper, Harrison,
Copiah, Covington, Jones, Lamar, Marion, Jackson, Pearl
Franklin, Hinds, Holmes, Perry, Walthall, River, Stone.
Humphreys, Jefferson, Wayne.
Jefferson Davis, Kemper,
Lauderdale, Lawrence,
Leake, Lincoln, Lowndes,
Madison, Neshoba,
Newton, Noxubee,
Oktibbeha, Pike, Rankin,
Scott, Simpson, Smith,
Warren, Winston,
Wilkinson, Yazoo.

TX Angelina, Fort Bend, Chambers, Hardin, Jasper,
Brazoria, Galveston, Liberty, Sabine, San Jefferson,
Harris, Montgomery, Augustine. Newton, Orange.
Nacogdoches, Polk,
San Jacinto, Shelby,
Trinity, Tyler,
Walker.

Source: Freddie Mac

Right now, there are bad loans out there, which have not gone to foreclosure because the value of the underlying property has gone up so when people have gotten in trouble they could sell it and pay off their loan. When this problem is going to become most acute is if our market levels out or dips. . . . We are going to have people that are in loans that they really shouldn’t be in, that they don’t have sufficient income to pay, and if property values drop even a little bit, they will find that the loan is bigger than the value of their house. That is extremely dangerous, and it will cause amazing dislocation for people who are not going to just lose their house but end up with significant debts.

Mortgage controls sought