Foreclosures set a new record

Posted by Mike Sylvester - 8/23/09 @ 2:17 pm - Filed Under National Politics

President Obama spent a lot of political capital and time trying to convince America that his administration was going to unveil numerous programs that would immediately save many Americans from foreclosure.

At the time when he unveiled these programs I opposed them on this blog; feeling that he was just going to throw good money after bad money.

I was right.

According the the Mortgage Bankers Association the foreclosure and delinquency rates in the United States hit another new record high.

According to the survey 4.3% of the home mortgages in the United States are in the foreclosure process.  An additional 8.86% of home mortgages are at least one payment behind.  This means that a whopping 13.16% of the mortgages in the United States are at least one payment behind on their mortgage. 

This is amazing and discouraging.  This means that more than one in every eight families with a mortgage is behind on their payments. 

This problem has the same root causes that I have been posting about for the last two years. 

Only two of the root causes have been addressed.  Interestingly enough neither of these root causes was addresses by the Government!

First of all banks and mortgage companies have tightened their loan requirements.  They are checking borrowers out more thoroughly and they are turning down a lot of people for loans.

Second of all no one is securitizing (bundling) these loans together and selling them on Wall Street.  There are currently no investors who want to purchased securitized mortgage loans.

Some interesting facts from the study:

  1. California, Florida, Arizona, and Nevada account for 44% of the foreclosures.
  2. In Florida 12% of the mortgages are in foreclosure, an additional 5% are at least 90 days late, and an additional 4.8% are at least 30 days late.  So in total in Florida 22.8 % of mortgages are at least 30 days late,
  3. In Nevada 21.3% are at least 30 days late.
  4. In Arizona 16.3% are at least 30 days late.
  5. In Michigan 15.8% are at least 30 days late.
  6. The number of FHA foreclosures are up. 

The survey concludes that these rates will not improve significantly until employment improves. 

I further conclude that Fannie Mae and Freddie Mac (Which are now owned by the taxpayers) are going to incur even larger losses and will require infusions of hundreds of billions of additional taxpayer dollars.  (In other words we will continue to throw good money after bad money).

Mike Sylvester

Comments

3 Responses to “Foreclosures set a new record”

  1. Jeff Pruitt on August 25th, 2009 12:16 am

    Mike,

    Did you know that Indiana ranks 7th on the list of mortgage foreclosures and delinquencies?

    Currently over 15% of Indiana homes are in the foreclosure process or are delinquent. But don’t worry, economic recovery is right around the corner…

  2. Robert Enders on August 25th, 2009 1:31 am

    I think that those foreclosure stats will improve even without an economic recovery. Lower housing prices will mean that new mortgages will be easier to pay off. But maybe I’m being too optimistic.

    The fact is that many of these foreclosed homes are priced more than my house. People probably should be looking for lower cost housing even during good economic times, no matter what the real estate agent tells them that they can afford.

  3. Mike Sylvester on August 25th, 2009 11:18 am

    Jeff,

    I did not know that. That is an exceleenet chart you linked to.

    Mike

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