More on mortgage delinquency and foreclosure
I recently wrote a post about statistics that seem to indicate that every house in America was headed to foreclosure. I just noticed an article by Kenneth Harvey, writing for the Washington Post that confirmed my suspicions about the interpretation of the delinquency statistics. I pointed out that 25% of all foreclosures were in just 4 very populous and formerly overheated real estate markets including California, Florida, Arizona and Nevada where many investors have walked away from properties bought during the real estate boom.
Mr. Harvey quotes Doug Duncan, chief economist for the Mortgage Bankers Association, who said, “In Nevada, for instance, non-owner-occupied (investor) loans accounted for 32 percent of all serious delinquencies and new foreclosure actions. In Florida, the investor share of serious delinquencies was 25 percent; in Arizona, 26 percent; and in California, it was 21 percent. That compares with a rate of 13 percent for the rest of the country.”
Mr. Harvey further points out, “But from a national perspective, how bad is the situation? Not as bad as it may sound … prime loans that are at least 30 days past due constitute just 2.6 percent nationwide. In other words, among mortgages made to borrowers with good credit at application, 97.4 percent are continuing to be paid on time.
The numbers get more sobering when you look at borrowers with subprime mortgages: 14.5 percent nationwide are behind on their payments by at least 30 days. That's more than five times the rate of delinquency among prime borrowers. On the other hand, it means 85.5 percent of subprime borrowers are still paying on time every month.
High housing costs and local economic conditions are key factors for subprime homeowners ... In economically stressed Michigan, more than one in five subprime homeowners are delinquent. In Ohio, Indiana and Illinois delinquency rates exceed 15 percent.”
Kenneth Harney’s bottom line: The scary foreclosure and delinquency rates you're hearing about are for real. But they're highly concentrated -- among loan types, local and regional economies, and are especially prevalent among investors in formerly high-flying markets who are throwing in the towel.
Please read the entire article.