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May 19, 2010 in Business
Mortgage delinquencies, foreclosures break records
WASHINGTON — The mortgage crisis is dragging on the economic recovery as more homeowners fall behind on their payments.
Analysts expect improvement soon, but the number of homeowners in default or at risk of foreclosure will have a lingering effect on the broader economy.
More than 10 percent of homeowners had missed at least one mortgage payment in the January-March period, the Mortgage Bankers Association said Wednesday. That’s a record high and up from 9.5 percent in the fourth quarter of last year and 9.1 percent a year earlier.
A big jump in the number of borrowers who have missed three months of mortgage payments drove the increase.
There was one encouraging sign: The number of homeowners just starting to show trouble is trending downward as the economy improves. As of March, nearly 3.5 percent of homeowners had missed one month of mortgage payments, down from about 3.8 percent a year earlier.
Around 4.3 million homeowners, or about 8 percent of all Americans with a mortgage, are at risk of losing their homes, the trade group’s top economist estimates. They have either missed at least three months of payments or are in foreclosure.
Should loan modification programs fail to help, their homes will go up for sale either as a foreclosure or short sale — when the bank agrees to sell the property for less than the original mortgage amount.
Many analysts have been forecasting home prices will dip again as more of these homes go up for sale at deeply discounted prices.
“It’s certainly a weight on the economy,” said Mark Zandi, chief economist at Moody’s Analytics, who predicts home prices will fall about 5 percent and hit the bottom next spring. “Nothing works all that well in the economy when house prices are falling.”
Federal tax credits boosted home sales this spring but they expired last month. As a result, mortgage applications to purchase homes fell to the lowest level in 13 years this week, the Mortgage Bankers Association said in a separate report Wednesday.
The latest foreclosure figures from the trade group are adjusted for seasonal factors. For example, heating bills and holiday expenses tend to push mortgage delinquencies up near the end of the year. Many of those borrowers become current on their loans again by spring.
Without adjusting for seasonal factors, the delinquency numbers dropped, as they normally do from the winter to spring.
More than 4.6 percent of homeowners were in foreclosure, also a record. But that number, which is not adjusted for seasonal factors, was up only slightly from the end of last year.
Stocks slid Wednesday as investors remain concerned with the European debt crisis. The rising number of mortgages also drew some attention. The Dow Jones industrial average fell more than 100 points in midday trading.
Jay Brinkmann, the trade group’s chief economist, said the foreclosure crisis appears to have stabilized. Seasonal adjustments may be exaggerating the change from the previous quarter, he added.
“I don’t see signs now that it’s getting worse, but it’s going to take a while,” he said. “A bad situation that’s not getting worse is still bad.”
The Obama administration’s $75 billion foreclosure prevention program has barely dented the problem.
About 25 percent of the 1.2 million homeowners who started the program over the past year had received permanent loan modifications as of last month. About 23 percent of those enrolled dropped out during a trial phase that lasts at least three months. Many more are still in limbo.
Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit. But homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.
Those borrowers made up nearly 37 percent of new foreclosures in the first quarter of the year, up from 29 percent a year earlier.
The risky subprime adjustable-rate loans that kicked off the foreclosure crisis are making up a smaller share of new foreclosures. They made up 14 percent of new foreclosures in the January-March period, down from 27 percent a year earlier.
© Copyright 2010 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
Northwest wheat 
Scoutster on May 19 at 8:11 a.m.
Not over yet. Still lots of debt in the housing market nobody has eaten written off yet.
remymartin on May 19 at 8:37 a.m.
Every day that goes by without giving real tax cuts to employers and individuals is another day that we extend this mess. Until the government gets out of our damn way and lets the American people have some incentive to produce and buy stuff and thereby, put people back to work where they can make their mortgage payments, this is going to go on for a long time. The government needs to do their job, like secure our borders, not bail everybody out and then tax the crap out of us and wonder why the economy is stuck in neutal.
SugarShane on May 19 at 9:09 a.m.
Sorry remy you only need to look as far as the Bush administration for the economies woes. Its has nothing to do with immigration or bail outs. The two wars we are fighting cost about 5 billion a week. You must be A Republican if your solution is more tax cuts for the wealthy, who are the only ones that get the “tax crapped out of them”. Maybe while we are at it we can give more tax breaks to big oil? That would fix the ol economy, give the wealthy all the money and then it will trickle down to us po folk.
Albert on May 19 at 9:11 a.m.
Just as a side note, I have a couple of friends who were unable to meet with their SlowCan property tax bills on their homes…their homes will now be auctioned for the taxes owning. In “most” states, the taxing agencies will levy a lien, plus interest, on the home, but will NOT auction the home, i.e. “confiscation”. This is not of course reflected within this article, however the results are the same - “out on the street homeowner”. The house is sold for the taxes owning, however this does not reflect the existing mortgages that will need to be addressed by the new “owner”. The new homeowner will not make up the back payments, if any, and will allow the extended foreclosure to continue, until the “renters” are tossed out down the road. How very sad indeed to see this type of governmental confiscation.
horse_feathers on May 19 at 9:53 a.m.
I’m with you on that remymartin, lets do what is right.
spokanecommunistparty on May 19 at 11:18 a.m.
You’ll need a job if you wanna pay for your house, too bad they all went to China. Now that we owe China, we can’t get our jobs back from them. I don’t think Shopko or Zip Trip pays enough to make a house payment. They don’t even get a vacation, well maby if you work there for a hundred years than they might finally award you with one day. Manufacturing is toast, thanks Bush. People can’t afford houses because the labor movement was destroyed by Republicans.
empyrius on May 19 at 11:45 a.m.
Yeah but just think of all those newfound homeless people we can then Christianize . . .
de3 on May 19 at 1:10 p.m.
A major home builder/construction firm doing about 9 projects in the County, including a big one near me, has not paid property taxes since 2007.
The large company is still in business and has not filed for bankruptcy. Instead, they are not paying taxes which is a way of using the taxpayer as their temporary funding source.
A direct consequence is that County services are being cut and county workers are being laid off.
Each of their big developments appears to represent hundreds of thousands of uncollected property taxes each year. In addition to not paying taxes, this builder received Federal tax law change benefits that enable them to write off current losses against the prior (to 2008) five years of windfall profits.
The topic of unpaid property taxes might make for a valuable story in the SR newspaper. It is easy to research at maps.spokanecounty.org where property and tax information is a publicly accessible public record.
Dazzeetrader11 on May 19 at 8:28 p.m.
And all along, I thought Obama was going to pay every one’s mortgages off! Cars too! Free gas!! Everything a wonderful savior would do for his adoring fans! Wake up! Government won’t save you. Bush didn’t cause this…goes back to Dodd and Barney in 94 when Clinton loosened it all up so he could be re-elected when we rejected Hillary’s version of Obamacare.
Government shouldn’t save you. YOU should get educated, work hard and be smart so you can succeed. America offers opportunity…nothing else. Go get it… but if you don’t, rely on Obama….and this is what will happen. Remember in November! Go Remy! Well put. Let America be America and things will work out.
Scoutster on May 19 at 8:53 p.m.
Ahhhhhhhh!
Like the wind, Daisy.
nslopeofw on May 19 at 9:29 p.m.
Daisy-
You got to remember, Obama has only been in office for 1.5 years. The Dems can’t quit blaming Bush until 3.75 years are done. You’ve got to HOPE for CHANGE. Funny thing is, you will be HOPE-ing for a long time.
Sugar Shane-
Time to quit drinking the kool-aid, and start taking responsibility for putting that do-nothing, socialist in power. Vote out the demo’s. You can help to right the wrong that you voted in. You gave him a chance, he has failed, now it’s time for some reality. We can only pay for things that we have money for. And, the amount he has spent in his 1.5 years, leaves nothing but MASSIVE debt.
Bush budget 2008-$3.1 T
Obama budget 2009-$3.6T
Obama budget 2010-$3.8T
Quit blaming Bush. Your candidate is far outspending GW.
SugarShane on May 19 at 10:09 p.m.
“We can only pay for things that we have money for.”
So where did the money for the 2 wars come from?
Theres no way to outspend Bush, as long as the wars continue, he gets credit for that mess. WMD’s, Osama, Fighting Terror, Keeping them from coming over here, Spreading Freedom, Stabilizing the region? Which pack of lies will it be this time. Who’s really drinking koolaid? Isnt our national defense budget close to 400 billion? Thats not Including the cost of 2 wars at 5 bil a week. War is usually good for the economy so where is all the money going? Why is gas still so expensive? Bush didnt just screw up the US economy, its spreading throughout the world and could very well unseat us as the #1 superpower. Now one of the worst oil disasters in human history is unfolding after all election season we heard repubs chanting drill baby drill.
Boy I sure will remember in November.
Dazzeetrader11 on May 20 at 12:51 a.m.
Shane….and just who do think continues those wars saying that they are essential? Who said he would close them out and bring the troops home by 2009 end of year? And who didn’t mobilize or even visit the oil leak site for 10 days? And who had already issued 27 drilling permits on fast track without proper permitting? And who tripled the new debt in 16 months…3 times more than Bush did in 8 years? And who demanded a whole new health care system at over $1 billion in costs annually? Well SON…welcome to OBAMALAND!!!
Now don’t you feel a bit “sugary” from all that Kool-Aid?
Lazer_Gun on May 20 at 6:45 p.m.
Wow, you guys are pathetic!
Bush blah blah blah
Obama blah socialist blah blah blah
Bush spent a lot of cash and Obama is doing the same.
It’s not the government’s fault that people aren’t paying their mortgages.
How can an article about mortgage delinquencies turn into such a big argument?
I just love the whining and finger pointing
Now I see why we’re not going anywhere!
Just sit back and watch the fireworks
nslopeofw on May 20 at 8:45 p.m.
You will notice that both Daisy and my comments were in reply to one of the “can’t get over Bush, Obama is god” crowd. Just who do you think started this whole mess? Yep, the federal government.
Don’t like the comments, and can’t reply with some intelligence? Don’t read ‘em.
JBlim on May 20 at 8:58 p.m.
nslope you wrote
“Bush budget 2008-$3.1 T
Obama budget 2009-$3.6T
Obama budget 2010-$3.8T”
Doesn’t that mean Bush was 3.1 / 3.6 or 86% socialist?
SugarShane on May 21 at 10:42 a.m.
Health care for 1 billion anually wow thats alot compared to the 5 bil a week for 2 wars.
nslopeofw on May 21 at 2:08 p.m.
JBlim-
That means The last two years of Bush’s “war” budget’s were less than Obama’s first “war” budget, debunking Sugar Shane’s comment that the Bush admin is responsible. We all know Barney Frank and gang (during Clinton’s years) was the friving force behind the economic woes of today.
I don’t blame Bush or Clinton for the sorry state we are currently in. I blame the EXISTING government. The senate, the house, and the president. I doubt they could have turned everything around this quick, but they didn’t have to make it worse.
Sugar Shane-
The entire budget for Bush (including war):
Bush budget 2008-$3.1 T
The entire budget for Obama (including war):
Obama budget 2009-$3.6T
Obama budget 2010-$3.8T
A little hard to spin that in a good light.
JBlim on May 21 at 5:54 p.m.
Bush got us into two unnecessary and costly wars. He gave the rich tax cuts instead of paying for the wars. We’ll be paying this off for generations. It would take any administration a while to get this under control. I remember during the election everyone asked why would anyone want to be president with the country in such a disaster. Some even said the Repugs wanted the Dems to win so they could blame the mess on the Democrats. Maybe that’s why they picked that ridiculous duo, McCain & Palin.
misjustice on May 22 at 2:03 p.m.
Not only did boy george get us into 2 wars, he borrowed the freakin’ money from China to pay for them; and kept the wars off budget. Talk about economic mismanagement…HUGE!
And JBlim, we both know how much BETTER the world would be if John McSame and the Quitter on Twitter had won in 2008! Why, there’d be world peace, no unemployment, the Dow Jones would be at 200,000, and ‘Merica would be respected by the entire world…why, it would be all sunshine, and kittens, and butterflies, and rainbows, and puppies…and unicorns! Until we nuked the Middle East…and North Korea…and anyone else that those two loons saw as a ‘threat’…yeah, if only they’d won!