The latest delinquency survey from the Mortgage Bankers’ Association re-states the story that everyone has know for some time – that late payments and foreclosures are still high and that many of them are for prime loans made to borrowers that are now unemployed.

The New York Times read the report, which states the both delinquencies and foreclosures dropped by a matter of a few basis points, and concludes that “Foreclosures Fall, but Rise in Delinquencies Causes Some Concern.” True enough, there is a rise in delinquent loans relative to one year ago, but we’re off by 21 bps from last quarter.

More than a few people have told me that banks are putting off on putting loans into foreclosure. This could be attributed to a number of things. Most often, I hear that both (more…)

How does the non-profit community account for the new state of home ownership, where “underwater” homeowners are increasingly prepared to walk away from the mortgage debt on their homes.

Here’s the problem: from policy leaders to on-the-ground community organizations, non-profits were telling their clients to buy a home for the last ten or fifteen years.  Now, many of those households are in homes that are underwater. Poor America, and in particular female black America, own less now than they have at any time in the last decade.

No one, from investors in mortgage-backed securities down to municipalities and neighbors, are happy when someone walks away. It creates all kinds of problems.

Do not confuse walking away with seeking a loan modification. The latter group are struggling to remain rooted to the American dream. The “walkers,” though, are rejecting the very concept that drove so many non-profit groups to support any effort at stimulating home ownership.

Home-ownership is still very popular, of course. Walking away is an option taken up by only a small minority. Fannie and Freddie articulate their mission as “the American Dream” business. Still, “walking away” is less rare than it used to be, and in (more…)

I am seeing more evidence that a wave of multifamily apartment buildings are about to enter foreclosure, and the prospect of that development seem very concerning.

While the peak for resets on sub-prime loans issued in the last decade has already crested, lots of commercial real estate debt is only now coming to maturation. The Washington Post reports that $1.4 trillion in commercial estate debt should roll over in the next three years. Half of those loans will be underwater by 2011, which should thwart demand for new financing.

While this is troublesome for investors and lenders working in the multifamily housing industry, it is also something that poses significant challenges for neighbors.  One issue is the loss of many affordable rental units. Another (more…)

A new study shows that African-American and Latino borrowers were much more likely to get subprime loans, even after important underwriting criteria have been taken into account. A few years later, subprime loans are six times more likely to fall into foreclosure. The authors conclude that the short and tragic lifespan of subprime products should compel legislators to draft a CFPA that protects housing wealth, and indirectly, our nation’s economy.

“Foreclosure in the Nation’s Capital: How Unfair and Reckless Lending Undermines Homeownership” gathers loan data from 2004 to 2007 in the Washington, DC metro area. A unique feature of NCRC’s research is that it has linked HMDA data, a common source for many mortgage studies, with loan performance data available through a proprietary set of servicing records.

Foreclosure Trends in Washington, DC. (NeighborhoodinfoDC)

The chart at left shows trends in foreclosures in DC on a quarterly basis. The blue line represents the inventory of foreclosed homes.  From a low in 2006, DC now has more foreclosed homes than at any time in the last ten years.  Moreover, these numbers may be false positives. It is possible that with a glut of pre-existing REO properties on the market, that lenders have been holding off on starting new foreclosures.

The research used a (ALERT: Data talk ahead!) logistic regression model to identify subprime loans.  No one factor made a loan subprime in their definitions.  Instead, a set of loan terms, borrower credit, and interest rates were used as independent variables that contributed to a nominal label of prime or subprime.

Key findings include:

• African-Americans and Latinos were 80 and 70 percent more likely, respectively, to get a subprime loan than were white borrowers, after controlling for the credit score, income, loan-to-value, and neighborhood characteristics.
• Mortgages made to African-Americans and Latino borrowers were 20 and 90 percent, respectively, more likely to enter into foreclosure.
• Loans purchased by the GSEs were half as likely to enter foreclosure as those held by private MBS investors.
• The most telling loan terms for gauging subprime: the presence of either a balloon payment (72 percent subprime) or a prepayment penalty (54 percent subprime).

Other data points confound what might be expected.  For example, the share of subprime loans was highest in moderate-income (more…)

The foreclosure crisis is not getting worse, but it is not getting much better. Foreclosure filings from the North Carolina Administrative Office of the Courts show that homeowners continue to struggle.Across the state, North Carolina is on pace for a 3 percent rise in foreclosures relative to 2009. Compared to the last ten years, the rate is up 53 percent.

The problems are most severe in three types of communities: in the kinds of beach and mountain communities that attracted the construction of vacation homes, in large metro areas, and where the loss of textile and tobacco jobs have not been replaced by new growth.

In some communities, foreclosures are actually down, even compared to the years before the real estate bust. More surprisingly, most of those counties are not well off at all. I have numbers from the last 13 years. I’ve tried to compare the rates in 2010 (annualized from the shortened calendar) to the average levels from 2000 to 2009. Unless otherwise noted, the two figures show the rate in 2010 compared to the decade average, and the increase from 2009 to 2010.

Big Metros with rapid population gains

Mecklenburg (Charlotte): up 60 percent over the last ten years, but down 18.1 percent this year.

(more…)