Subprime Delinquencies Slowing? Guess Again [Housing Tracker]

Quote of the Day 

"The more recent vintages are suffering more performance related issues sooner, and to a greater degree.” - Robert Pollsen, an analyst at S&P in New York, on rising rates of prime mortgage defaults. (Reuters, Aug. 22)

Mortgage Trends

Collateral Damage. “[For the] first [time in] 73 years, San Diego Metropolitan Credit Union lost money [last year] on a real estate loan… [U.S] credit unions – generally considered the most conservative of lenders – are seeing a rise in delinquent mortgages, late credit card payments and late auto loan payments… So far, loan delinquencies at credit unions remain relatively minor... Late payments on first-lien mortgages for California credit unions were just 0.54% of all such mortgages in Q1, up from 0.41% at year's end. Delinquencies for home equity lines of credit and other second-lien mortgages were higher – hitting 1.02% in Q1, up from 0.79% at year's end.” (San Diego Union Tribune, Aug. 24)

US Prime Mortgage Defaults Worsen Faster Than Subprime. “S&P: Total delinquencies on prime "jumbo" loans and "Alt-A" loans made in 2007 rose at a 7.3% and 9.12% rate, respectively, from June... For subprime loans, the rate of delinquency rose 7.0% last month. Overall, delinquencies on 2007 prime jumbo loans rose to 3.22% in July, while Alt-A loan delinquencies increased to 14.56%. Defaults on subprime loans from last year hit 31.25%… Delinquencies on loans made in 2006 exceed those of 2007, probably because of the longer period from origination… In a positive note for prime jumbo loans, serious delinquencies -- including loans more than 90 days past due, foreclosures and bank-owned real estate -- increased at a slower rate in July.” (Reuters, Aug. 22)

Fannie Doesn’t Want New York Subprime, Either. “[Following] Freddie Mac (FRE), Fannie Mae (FNM) [will] no longer purchase subprime loans fitting NY State’s new definition for the credit class. The decision by both GSEs to exit subprime loan purchases in NY comes on the heels of new legislation designed to protect borrowers from predatory lending practices. Fannie SVP Michael Quinn: NY’s new definition of subprime falls under what the GSE sees as “high-cost” or “high-risk” home loans, and Fannie has had a long-standing policy of not purchasing such loans for securitization or for its retained portfolio… The FHA is… still making loans in NY State… which makes for an interesting twist.” (Housing Wire, Aug. 22) 

Subprime Delinquencies Surge in July. “Clayton Fixed Income Services, Inc.: The percentage of subprime borrowers 60 or more days in arrears at the end of July surged for both the 2006 and 2007 vintages, up nearly 7% and 11% compared to June, respectively… Despite a sharp increase in cures… the number of troubled subprime borrowers… is again swelling — the 2006 vintage saw its cure rate rise 11.8%, while the 2007 vintage saw cures rise nearly 20% compared to one month earlier… A large volume of repayment plans put into place earlier this year for troubled subprime borrowers are now failing… Analysts touting slowing subprime delinquencies as proof that the mortgage mess was working itself out… may now want to rethink their position.” (Housing Wire, Aug. 21)

 

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Comments

[venividivici:]

I'll tell you someone who won't be reading this article, Judy and that's dear old Tom Brown. It would spoil his next article on SA about how much better things are getting in subprime.

2008 Aug 25 10:05 AM

[billddrummer:]

Hi Judy,

A great compilation. Thanks for continuing to provide it.

Officially, foreclosures and NODs have supposedly peaked in this area. But I think the assessor's office is way behind on its filings. (I'm still listed as owner of record on a house that was foreclosed on and sold back in September 2007, then resold to a buyer in June 2008. Neither title transfer has been recorded yet.) So there may be a number of 'shadow filings' that don't show up in the statistics. But if you look around various neighborhoods, you see dead grass, unkempt landscaping, and peeling paint, indications that people have either given up maintaining their homes, or given up the homes altogether.

It may take another year before recordings catch up to reality. In the meantime, pundits are claiming that 'the worst is behind us.'

I don't believe it.

2008 Aug 25 10:52 AM

[Dirtt:]

REVOLTING. Being one who got off the elevator near the top floor of the housing bubble I should just be happy that the proceeds were tucked 'safely' on the short side.

No. Happy I'm not. Relieved. But not happy. I'm livid and shocked that my fellow Americans are ready to swallow the storm surge from Hurricane Fannie and Hurricane Freddie. I want answers.

Who is responsible for putting LOBBYISTS in charge of the GSE's?

Why aren't we following the money trail from the GSE's (and Countrywide) to 527 groups?

Why aren't we following the money trail from the GSE's (and Countrywide) to members of Congress?

Why aren't we examining WHY the 2006 bill to employ a regulator to monitor the GSE crack-dealers was voted down and more inportantly WHO voted it down?

Where are the investigations? The Subpoenas?

REVOLTING America. Wake up.

2008 Aug 25 02:32 PM

[kurt walter:]

The mortgage market will only be getting worse over the next few years. Why? There are tons of adjustable rate mortgage loans that will be adjusting in 2009, 2010 and 2011. The tidal wave will be coming. You haven't seen anything, yet.

2008 Aug 25 07:50 PM