| More Mortgage Holders Fell Behind on Payments in 3rd Quarter |
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Wall Street Journal - Real Estate The percentage of U.S. mortgage holders who were behind in their payments soared to a record 6.99% of loans outstanding in the third quarter, the Mortgage Bankers Association said Friday, and the number of mortgages somewhere in the foreclosure process was also at a new high. But the number of mortgages on which foreclosure proceedings was started actually fell slightly during the third quarter compared with the second quarter, according to the Mortgage Bankers Association’s quarterly delinquency survey. That doesn’t necessarily indicate a slowdown in foreclosures, said Jay Brinkmann, MBA’s chief economist. “An initial look at the number of foreclosure starts would seem to indicate at least leveling off of foreclosures. These numbers, however, are being influenced by several factors including various moratoria on foreclosure filings and by mortgage companies holding loans in the 90-plus-day bucket during the modification and workout process,” said Mr. Brinkmann. “Evidence of this can be seen in the large increase in loans 90 days or more past due but not yet in foreclosure. This rate jumped by 45 basis points, the highest increase in this category ever recorded in the MBA survey and far above the average 4 basis point jump we would expect to see.” Mortgages entering the foreclosure process fell to 1.07%, from 1.08% in the second quarter but were up from 0.78% a year ago. The delinquency rate for mortgage loans on one- to four-unit properties was 6.99% of all loans outstanding at the end of the third quarter. That’s up from 6.41% at the end of the second quarter and 5.59% a year ago, according to the survey. “There are some good reasons, in a sense, why that number might go up,” Mr. Brinkmann said, during a phone interview. As mortgage lenders and servicers try and work with borrowers, constructing repayment plans and modifying loan terms, those borrowers will remain classified as delinquent until they can show they can make payments on time, he said. The percentage of loans somewhere in the foreclosure process also rose in the third quarter to 2.97%, up from 2.75% in the second quarter and 1.69% a year ago. But some of the reasons why people are struggling to make their mortgage payments are shifting, Mr. Brinkmann said. In past quarters, California and Florida have had some of the highest foreclosure start numbers, and much of that had to do with a combination of too many houses, speculation and weak underwriting, he said. Now, those states are dealing with job losses. “Economic fundamentals are now deteriorating in California and Florida. Over the past year, Florida led the nation in job losses at 156,200, with California losing 101,300, as compared with Michigan job losses at 71,200 and Ohio at 17,300,” he said in the release. Subprime mortgages continued to perform poorly, with more than 19.5% of those loans seriously delinquent in the third quarter, meaning homeowners were more than 30 days past due on payments. |