In our last post, we reported that foreclosures were down for the first time in two years. But now, the latest reports say that mortgage delinquencies are surging to record levels. What’s up with that?
Basically, a combination of the afterglow of the lingering recession – job losses, few new employment prospects and lower income levels with banks’ increasing willingness to start recognizing delinquencies and failed mortgage modifications.
More than 10 percent of all homeowners had missed at least one mortgage payment in the first quarter of 2010, up from 9.1% a year earlier, according to the Mortgage Bankers Association. Other analysts still anticipate a double dip in housing prices, with prices dropping another 5% or so, before starting to recover by the end of next year.
Now, rather than bad lending standards and practices, the cause of the increase in delinquencies is economic stress due to unemployment and reduced incomes – a byproduct of the recession that doesn’t seem to be going away fast enough.
Currently homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures – amounting to 37% of foreclosures in the first quarter.
Tags: default, delinquent, Distressed Property, double dip, Foreclosure, loan modification, Short Sale