- Rate of consecutive missed payments fell
- New defaults rose as unemployment claims increased
- All eyes are now on Shaun Donovan’s fresh initiatives
Did a ray of hope shine at the end of the second quarter of 2010 (when the rate of consecutive missed mortgage payments fell more rapidly than in any other quarter in the past 4 years) or was this just another false promise? This may well be the case according to other data released simultaneously by the Mortgage Bankers Association. The worrying counterpoint is the increase in new defaults. Could this be an indication that delinquencies and repossessions will shortly be on the march again?
A further worrisome indicator is that in June 2010 14.4% of all American borrowers were somewhere between missing a payment and a final foreclosure. This is down by 0.3% compared to March, but 0.9% worse year-on-year. The slight improvement in the latest results is ascribable to the fact that fewer borrowers lay in the 60 days overdue bracket (although those who had missed a single payment increased).
“We’re past some of the worst problems,” thinks economist Jay Brinkmann of the Mortgage Bankers Association. “But, with more than seven million homeowners behind on payments or in foreclosure,” he adds, “the bar for good news is being set very low.”
The marginal improvement was evident in most American States. Analysts noted the biggest gains in hardest hit Nevada, Florida and Arizona. These have been the targets of intense Federal assistance recently – dare I hope that this is an indication that HAMP is making progress there? On a cautionary side, the rising number of first-missed payments seems to reflect affordability difficulties in the modified mortgage market.
There may also be a link to unemployment, because claims against unemployment insurance rose at the same time. The greatest impact of first-missed payments was on the Federal Housing Administration. According to Jay Brinkman, unemployment has overtaken sub-prime loans as the biggest driver of foreclosures in America. As he rightly points out, a borrower needs an income to pay a lender.
In the course of the past 12 months, Washington has taken forceful steps to settle the national housing market. These steps have included tax credits aimed at spurring sales, and underpinning low deposit mortgages with Federal Housing Administration support. Mortgage interest rates are also currently at an all-time low, averaging 4.36% according to Freddie Mac. Notwithstanding all these interventions, July sales plunged as tax credits waned and fresh concerns emerged regarding the state of the American economy.
It seems a ray of hope did not shine after all, and repossessions could soon be on the rise again. The latest efforts announced by Shaun Donovan reveal fresh attention given to unemployed homeowners facing the threat of imminent foreclosure. Information provided by www.foreclosuredatabank.com who also list foreclosure real estate for sale.
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Written by Alex Rolim.
