Mortgage Delinquencies At All Time High
August 24th, 2009 categories: Buyer Resource, Seller Resource
The number of homes that have mortgages that are in delinquent status is at an all time high. According to the National Delinquency Report from the Mortgage Bankers Association, 9.24% of ALL mortgages are at least 30 days behind.
This is an important report, and we want to clarify that this report DOES NOT include mortgages that are currently in the foreclosure process. 4.3% of ALL mortgages are somewhere in the foreclosure process, up from 3.85% just 3 months ago, and up from 1.55% from last year.
Wow…this is definitely big news…is this good news or bad news??? We are not really sure, as there are a lot of moving parts to consider. We will look at both sides of the argument.
On one hand, the market is still moving extremely well. Homes and condos right here in Sonoma County are still receiving multiple offers, however this may not be indicative of the nationwide Real Estate market. Mortgage Rates are still at remarkably low levels. Housing Affordability is still at high levels. The $8,000 tax credit is still in effect for qualified purchases.
On the other hand…we are not sure the future of mortgage rates. If the Federal Reserve decides that the economy is improving as they did in recent weeks, they will likely not cut the Federal Funds Rate, which has a large impact on Interest Rates. We have all noticed that home mortgage rates have steadily increased over the past 2 months. If a lot of new inventory hits the market as it appears that it may with news of mortgage delinquencies at all time highs, this could further depress prices. If the $8,000 tax credit goes away (currently must close a deal before December 1, 2009), this is one less thing that could “incentivize” (not a real word, just an MBA word) some to purchase homes.
We think that Real Estate Inventory would actually be good for the market locally, but we do not think more foreclosures are a good thing, locally, or nationally. Since there are still multiple offers, we think this shows greater demand than supply. We would like for everyone to be able to buy a new home if they so choose.
We DO NOT think this is a good sign for municipalities with lots of foreclosures, as unpaid property taxes significantly hurt the effectiveness of any municipality as they cannot pay for services that the community needs.
It is fair to note that this news is likely a direct result of the economy as a whole…the economic slowdown, lack of jobs, high unemployment rates, etc.
What does this mean for Sonoma County? Unfortunately this is a national survey and is not broken down by county. The numbers do come from each state’s Mortgage Bankers Association and there are 4 problems states…the same 4 that have seen most of the foreclosure activity….California, Nevada, Arizona and Florida. These 4 states make up 44% of the foreclosure activity…amazing.
Will all of this lead to more short sales or even more foreclosures? It seems likely this is the scenario that will play out, but we cannot sya for sure.
We will keep you posted with any new updates.
