RISMEDIA, February 23, 2010—(MCT)—The clouds may be starting to lift, ever so slightly, for the beleaguered housing market. The latest evidence came recently when new data showed that fewer homeowners are falling behind on their home loans.
The delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 9.47% of all loans as of the end of the fourth quarter of 2009, according to the Mortgage Bankers Association. That’s down from 9.64% in the third quarter. It’s extremely rare for the delinquency rate to decline at the end of the year when homeowners are grappling with the cost of heating bills and Christmas presents, according to the trade group.
“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007 and continued with the meltdown of the California and Florida housing markets due to overbuilding and the weak loan underwriting,” Jay Brinkmann, the group’s chief economist said.
However, the data still pointed to a troubled housing market that is likely to worsen before it improves. The delinquency rate was up from 7.88% a year ago. And though California is faring better than some other hard-hit states, the state delinquency rate is 12.49%. “This is a key sign that housing market conditions are slowly, grudgingly, getting slightly better,” Mike Larson, a real-estate analyst at Weiss Research, said. “This does not mean we’ll have a vigorous recovery. We won’t. Many loan modifications will fail, the unemployment rate remains elevated, and lending standards will remain relatively strict for some time.”
In a sign that delinquencies may be leveling off, loans past due by 30 days and 60 days declined compared with the third quarter of 2009 and the fourth quarter of 2008. The number of loans going into foreclosure, though up from a year earlier, declined compared with the third quarter as efforts to modify mortgages took hold. But the portfolio of loans more than 90 days past due—containing the mortgages being evaluated for modifications—continued its rise to record levels.
That indicates that there is still much short-term pain for the housing markets to endure as many of these fall into foreclosure.
The group said 4.99% of all prime fixed-rate loans, the kind made to the best-qualified borrowers, were categorized as seriously delinquent (that is, in foreclosure or more than 90 days past due), up from 2.25% a year earlier.
For prime adjustable-rate loans, the category containing tricky pay-option mortgages, 18.13% were seriously delinquent, compared with 10.45% a year earlier. And 42.7% of subprime adjustable loans were seriously delinquent, up from 33.78% in the fourth quarter of 2008.
Brinkmann noted that the mortgage trends mirror those in the job market, where the number of long-term unemployed remains high while new unemployment claims have been declining.
(c) 2010, Los Angeles Times.
Distributed by McClatchy-Tribune Information Services.