Mortgage delinquencies up to almost 4%

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For the quarter ended Sept. 30, 3.96 percent of people holding a mortgage were at least 60 days behind in payments, compared with 2.56 percent in the 2007 third quarter.

The highest delinquency rates continue to be in Florida, at 7.8 percent, Nevada, at 7.7 percent, California, at 5.8 percent and Arizona at 5.5 percent, TransUnion data showed. Mississippi is fifth, at 4.6 percent.

Holy crap, Batman! 7.8% of mortgage holders in Florida are 60 or more days behind...

While someone who is 60 days past due on their mortgage is not yet threatened with foreclosure, Becker said it is a strong indicator that someone might not be able to catch up.

That is going to continue to depress any kind of a housing depreciation plateau until these are sorted. Considering unemployment is still fairly low I'm really surprised at how high these figures are.

 

[techs]

I'm thinking that since real income has stagnated over the last 7 years the huge energy increases forced many people to become delinquently recently.
I think the big question for right now is will the lower energy costs help people to get back into a current state on their mortgages.
Of course, the real issue is how many delinquencies will the coming unemployment bring.
Only after we reach the bottom of that will we really see the housing market bottom.

 

[LegendKiller]

Originally posted by: techs
I'm thinking that since real income has stagnated over the last 7 years the huge energy increases forced many people to become delinquently recently.
I think the big question for right now is will the lower energy costs help people to get back into a current state on their mortgages.
Of course, the real issue is how many delinquencies will the coming unemployment bring.
Only after we reach the bottom of that will we really see the housing market bottom.

It's got nothing to do with wages or energy.

 

[Genx87]

People got in over their heads. Interest only loans that saw a spike in interest rates. Plus with the depreciation in the housing markets. People who bought these things to flip them are letting them go. Why not? They cant flip them, cant make the payment, and cant even sell to break even. If you are going down, might as well go down hard.

btw I believe most states have laws that bar forclosure or eviction for many months after stopping payment. In MN I believe it takes a full 12 months before you can be legally tossed out of the house. If you are paying a 500,000 dollar interest only loan and saw 50K in depreciation. You were probably paying near 9-10% last year on that. 10% euqals 50K. Stop paying the loan and make up your depreciation.

 

[StageLeft]

Originally posted by: Genx87
People got in over their heads. Interest only loans that saw a spike in interest rates. Plus with the depreciation in the housing markets. People who bought these things to flip them are letting them go. Why not? They cant flip them, cant make the payment, and cant even sell to break even. If you are going down, might as well go down hard.

btw I believe most states have laws that bar forclosure or eviction for many months after stopping payment. In MN I believe it takes a full 12 months before you can be legally tossed out of the house. If you are paying a 500,000 dollar interest only loan and saw 50K in depreciation. You were probably paying near 9-10% last year on that. 10% euqals 50K. Stop paying the loan and make up your depreciation.

Wow, that is crazy that a person could stay in their house that long after foreclosure.

 

[CycloWizard]

The government has removed any incentive for people to keep paying their mortgages. Anyone could have predicted this outcome. I'm just surprised it's not worse than it is yet.

 

[Jaskalas]

Originally posted by: Skoorb
That is going to continue to depress any kind of a housing depreciation plateau until these are sorted. Considering unemployment is still fairly low I'm really surprised at how high these figures are.

That is how widespread the scams were that got people into property they couldn't afford unless they leveraged the "infinitely" increasing value. They jumped on the bubble, and got burned.

You also hit the nail on the head. The effects of unemployment haven?t even hit yet. This is only the beginning.

 

[First]

Originally posted by: CycloWizard
The government has removed any incentive for people to keep paying their mortgages. Anyone could have predicted this outcome. I'm just surprised it's not worse than it is yet.

You mean besides trashing your credit for a minimum of one decade, facing the humiliation of bankruptcy, and possibly being on the street? Yup, there's no incentive to avoid any of that! :laugh:

 

[Jaskalas]

Transunion: Mortgage delinquencies to double by next year.

2009 will be worse than 2008.

 

[chess9]

Originally posted by: CycloWizard
The government has removed any incentive for people to keep paying their mortgages. Anyone could have predicted this outcome. I'm just surprised it's not worse than it is yet.

I don't understand this. What incentive did the government remove?

-Robert

 

[LOFBenson]

Originally posted by: chess9

Originally posted by: CycloWizard
The government has removed any incentive for people to keep paying their mortgages. Anyone could have predicted this outcome. I'm just surprised it's not worse than it is yet.

I don't understand this. What incentive did the government remove?

-Robert

People no longer have to pay income tax on debt forgiven in a foreclosure.

 

[Thump553]

Originally posted by: Genx87
* * *
btw I believe most states have laws that bar forclosure or eviction for many months after stopping payment. In MN I believe it takes a full 12 months before you can be legally tossed out of the house. * * *

This is basically not correct-at all. I could respond better if you would link to the statutes relied on for your authority, but basically: some states have laws that specify a longer redemption period if the lender wants to get a deficiency judgment against the mortgagors for the shortfall. Similarly my state just adopted a statute that the foreclosing mortgagee can't evict a third party tenant who continues to pay his rent until the end of the lease term (not as great a protection as it sounds-here, under an oral lease that means one month protection).

There is a real constitutional problem (as there shoudl be) in crafting mortgage forebearance statutes so that they don't improperly confiscate the property of the mortgagee.

 

[zephyrprime]

Originally posted by: Evan

Originally posted by: CycloWizard
The government has removed any incentive for people to keep paying their mortgages. Anyone could have predicted this outcome. I'm just surprised it's not worse than it is yet.

You mean besides trashing your credit for a minimum of one decade, facing the humiliation of bankruptcy, and possibly being on the street? Yup, there's no incentive to avoid any of that! :laugh:

Your credit is only wrecked for about 3 years. You don't face bankruptcy either. There's a ton of rentals available due to all the houses that can't sell.

Walking away from your mortgage is a very attractive option for many people. The gov is created a perverse incentive by being laxer on bankruptcies.

 

[First]

Originally posted by: zephyrprime

Originally posted by: Evan

Originally posted by: CycloWizard
The government has removed any incentive for people to keep paying their mortgages. Anyone could have predicted this outcome. I'm just surprised it's not worse than it is yet.

You mean besides trashing your credit for a minimum of one decade, facing the humiliation of bankruptcy, and possibly being on the street? Yup, there's no incentive to avoid any of that! :laugh:

Your credit is only wrecked for about 3 years.

Your credit rating is down the tubes for at least 7 years in the absolute best case scenario, and 10 years more likely. Depending on when you went bankrupt and whether it was Ch. 7 or 13, it can be over a decade until you get a loan without having to pay exorbitant rates.

You don't face bankruptcy either. There's a ton of rentals available due to all the houses that can't sell.

When you're in massive debt and can't pay, you either file for bankruptcy or watch people confiscate every single asset you have to pay off that debt. So it only makes sense to file for bankruptcy because you can get your debt restructured (i.e. less interest and lower total debt). I don't even know why you're bringing up renting, since by definition you can't pay for rent without money, and you certainly won't be able to go into more debt when you're already delinquent.

Walking away from your mortgage is a very attractive option for many people. The gov is created a perverse incentive by being laxer on bankruptcies.

This applies to a very small subsection of people and cannot be done unless you're inordinately poor. It's a myth.

 

[dmcowen674]

Originally posted by: LegendKiller

Originally posted by: techs
I'm thinking that since real income has stagnated over the last 7 years the huge energy increases forced many people to become delinquently recently.
I think the big question for right now is will the lower energy costs help people to get back into a current state on their mortgages.
Of course, the real issue is how many delinquencies will the coming unemployment bring.
Only after we reach the bottom of that will we really see the housing market bottom.

It's got nothing to do with wages or energy.

It's all Obama's fault then?

 

[Genx87]

Originally posted by: Thump553

Originally posted by: Genx87
* * *
btw I believe most states have laws that bar forclosure or eviction for many months after stopping payment. In MN I believe it takes a full 12 months before you can be legally tossed out of the house. * * *

This is basically not correct-at all. I could respond better if you would link to the statutes relied on for your authority, but basically: some states have laws that specify a longer redemption period if the lender wants to get a deficiency judgment against the mortgagors for the shortfall. Similarly my state just adopted a statute that the foreclosing mortgagee can't evict a third party tenant who continues to pay his rent until the end of the lease term (not as great a protection as it sounds-here, under an oral lease that means one month protection).

There is a real constitutional problem (as there shoudl be) in crafting mortgage forebearance statutes so that they don't improperly confiscate the property of the mortgagee.

Minnesota's redemption period is 6-12 months depending on the property. My understanding of the process in MN from people who have gone through it and viewing some links via google is 1-3 months and they finally put you into forclosure. Usually by the 5-6 month the auction is setup. Then you have 6+ months from the date of auction for a redemption period in which you are allowed to live in the property without paying for it. Or you can cough up some cash and start the process all over.

 

[Jhhnn]

There's so much disinformation in this thread it's hard to tell where to start.

First off, there's no profit for the homeowner in a mortgage default. The whole tax angle referred to theoretical gains from renegotiated mortgages, where the lender and the borrower agree to a lower debt outstanding. Not having to pay taxes on any theoretical gain encourages renegotiation and discourages default, which is why the law was changed.

Bankruptcy was made more onerous for debtors under GWB and the repub congress in 2005, so blaming the govt in that respect is erroneous-

http://en.wikipedia.org/wiki/B...onsumer_Protection_Act

A homeowner's ability to walk away w/o declaring bankruptcy varies by State and by the terms of the mortgage. In California, for example, lenders have no recourse beyond taking possession of the property and trashing the defaulted homeowners' credit for many years to come, if certain conditions are met. It's a "non-recourse" State. In other States, lenders can obtain judgement against defaulted homeowners who don't take what little protection bankruptcy offers.

None of this is teh ebil gubmint's fault except in the sense that the free market rah-rah hands off let the market decide philosophy of the party running things led to this fiasco... not to mention obvious collusion with the FRB in practically giving away money at ridiculously low rates...

And it'll get worse before it gets better. Huge numbers of option ARM's recast over the next few years, and the terms will force many more people into default...

http://bp3.blogger.com/_pMscxx.../s1600-h/IMFresets.jpg

http://www.therealestateblogge...eowners-feel-distress/

Anybody having one of these notes or holding the paper on them has to have a very, very twitchy rectum anticipating what's in store for them...

Free Market! Deregulate! Rah! Rah! Oh yeh! Oh Baby! Give it to me!

And uhh, Alt-A mortgages aren't looking a whole lot better...

 

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One in 10 American homeowners fell behind on mortgage payments or were in foreclosure during the third quarter as the world?s largest economy shed jobs and real estate prices tumbled.

The share of mortgages 30 days or more overdue rose to a seasonally adjusted 6.99 percent while loans already in foreclosure rose to 2.97 percent, both all-time highs in a survey that goes back 29 years, the Mortgage Bankers Association said in a report today. The gain in delinquencies was driven by an increase of loans with payments 90 days or more overdue.

Ouch.