Mortgage Data Underscores Increasingly Dire Forecasts [Housing Tracker]

Mortgage Trends

Fitch Warns on Option ARMs; “High Defaults Await”.  “Fitch Ratings: Most outstanding neg-am mortgages won’t get out of 2011 alive... Fitch expects roughly $29 billion in option ARMs to recast to higher monthly payments by the end of 2009, and an additional $67B to recast in 2010; of this, approximately $53B is attributed to early recasts…. Fitch expects 90-day plus delinquencies — already ranging from 10%-24%, depending on vintage — to more than double after recast for 2004-2007 vintage loans… Fitch also estimated the potential average payment increase on the re-casting loans to be 63%, representing on average an additional $1,053 due each month.” (Housing Wire, Sept. 2)

Originations Predicted to Fall 20 Percent Next Year: Report. “Industry research and forecasting think-tank iEmergent: Total national originations could fall more than 20% from 2008’s likely-already-dismal totals, as tighter mortgage guidelines and a real estate market in flux continue to pinch borrowers. Total originations could fall as low as $1.53 trillion next year; by comparison… 2008’s total will range from $1.94-$2.1T, depending primarily on refi volume… Total originations in 2009 will likely range from $1.53T-$1.61T; refinancing volume is estimated to range from $695.6 billion to $768.9B next year. To put those refinance estimates into context, it’s worth noting that iEmergent has forecast refis between $997B-$1.16T in 2008.” (Housing Wire, Sept. 2)

FHA Regaining Market Share. “Mortgage Insurance Companies of America [MICA]: Private mortgage insurers saw demand hit a low [86,734] for the year in July, with applications falling 4.6% from the previous month and 52% from a year ago. Meanwhile, FHA loan guarantees are grabbing more market share… MICA: The dollar volume of primary new insurance written on newly originated conventional mortgage loans totaled $12.3 billion in July, also a low for the year. The group said 70,725 borrowers used private mortgage insurance to buy or refinance a home in July, a 59.3% decline from a 12-month high of 173,949 policies written in October.” (Inman News, Aug. 29)

Mortgage Insurers See Defaults Increase in July.  “MICA: Homeowner delinquencies are ratcheting back up again after a few months of easing... July defaults were up nearly 34%  from one year earlier, reaching 68,831; that compares to 67,908 in June. The y/o/y comparison is potentially inflated, however, as one large lender altered how it reports insured defaults in April; it’s unclear what the impact of that change has been in subsequent months. MICA’s July’s data [also] no longer includes data from Triad Guaranty Inc. (TGIC), the nation’s seventh-largest insurer. Triad [said] it would stop selling new policies and move its portfolio into runoff after failing to raise fresh capital.”  (Housing Wire, Aug. 29)

Fixed-Rate Mortgages More Affordable. “Freddie Mac weekly Primary Mortgage Market Survey: Rates for 30-year fixed-rate mortgages averaged 6.4% this week with an average 0.6 point, down from 6.47% a week ago and 6.67% a year ago. The 15-year fixed-rate mortgage averaged 5.93% with an average 0.6 point, down from 6% a week ago and 6.12% this time last year. Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 6.03% with an average 0.6 point, up from 5.99% a week ago but down from 6.35% last year. One-year Treasury-indexed ARMs averaged 5.33% with an average 0.7 point, up from 5.29% last week but down from 5.84% a year ago.” (Inman News, Aug. 29)

Prime Foreclosure Starts Surge Past Subprime in July. “Hope Now coalition: Prime foreclosure starts have finally moved ahead of subprime foreclosure starts, for the first time since the industry coalition began collecting data in July of last year — and likely for the first time in a much longer timeframe, as well… It’s a point that was missed in many media reports touting Hope Now’s success in preventing more than 2 million foreclosures during the past year; but it’s a critical shift that should be garnering more public policy focus than it currently is.” (Housing Wire, Aug. 28)

FHA To Discontinue Risk-Based Pricing Oct. 1. “Bowing to Congress, the Federal Housing Administration will discontinue risk-based premium pricing on its loan guarantee programs for one year beginning Oct. 1… Borrowers seeking FHA-guaranteed purchase loans will [now] pay an upfront premium of 1.75%, regardless of their credit standing. That's 25 basis points more than the 1.5% upfront premium in place before risk-based pricing was implemented in July, or an additional $375 on a $150,000 mortgage. Troubled borrowers seeking to refinance under the FHA-Secure and Hope-for-Homeowners programs will pay a 3% upfront premium, a 75-basis-point increase over the current maximum rate for FHASecure, or an additional $1,125 on a $150,000 home loan.” (Inman News, Aug. 28)

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