The percentage of home mortgage holders who were behind in their home payments jumped to a record 6.99% of loans outstanding in the third quarter (ending September 30), the Mortgage Bankers Association said Friday. That could be just mildly-late payments, or on the verge of foreclosure. While I do not yet have data for the third quarter in Coconino County, the second quarter showed our county lagging behind the worst areas of the country, according to data reported by the Federal Reserve and shown in the attached map. The map shows 1.43% of mortgage loans in Coconino County were more than 90 days delinquent (aka, in foreclosure or bankruptcy) at the end of the second quarter (ending June 30). That compared with 3.86% for Maricopa County over the same time period. The darker the area on the map, the darker the picture for foreclosures. But Friday’s report says that in the 3d quarter, foreclosures reached new highs. According to the Mortgage Bankers Association report, just under 3% of U.S. mortgages were somewhere in the foreclosure process. As MBA Chief Economist Jay Brinkmann pointed out, mounting job losses were sure to send that figure higher in coming months. More from Mr. Brinkman of the Mortgage Bankers Association: “The 30-day [mortgage] delinquency rate is still lower than it was in the 2001 recession, but job losses are mounting. We have not gone into past recessions with the housing market as weak as it is now so it is likely that a much higher percentage of delinquencies caused by job losses will go to foreclosure than we have seen in the past. “Until recently, it was job and population losses that were the problems in states like Michigan and Ohio, whereas the problems in California and Florida were a combination of too many houses, speculation and weak underwriting. 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.”
Here is the kicker, from my point of view: It is in the banks' interest to refinance mortgages, extend workout plans, and keep people in homes because every time they foreclose on a home, it costs roughly $50,000 to get that home back on the market and sold. So, postponing several thousand in interest payments, or even giving up some interest over the life of the loan isn’t a bad deal for the banks. But, and it is a big one, the banks are laying off workers, too. They don’t have people trained and qualified to negotiate workout plans with homeowners, or even to negotiate short-sale contracts with willing buyers. It’s more in their routine, and takes less-skilled employees, to work the foreclosures. So, why don’t we make them put some of that federal bailout money into hiring (or retaining) the bankers who can do the job right? It would reduce the unemployment problem and mitigate the housing crisis, both! |
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