U.S. Mortgage Delinquency Rates Rise
U.S. Mortgage Delinquency Rates Rise
By Bloomberg Financial
(Bloomberg) -- Home loan delinquency rates released by the Mortgage Bankers Association may show an increase for a fourth straight quarter as subprime defaults ripple through the real estate market.
Past-due payments on 43 million loans tracked by the survey have climbed since a five-year boom in U.S. housing prices ended a year ago. In the third quarter of 2006, about 4.6 percent of mortgage holders were at least 30 days late, including about 2.4 percent of prime borrowers and 12.6 percent of subprime customers with poor or limited credit histories.
``The delinquencies and defaults have started to soar,'' said Nicolas Retsinas, director of Housing Studies at Harvard University in Cambridge, Massachusetts. ``A lot of these lenders started to make loans and lost track of some of the fundamentals.''
The delinquency data comes a day after New Century Financial Corp., the second-biggest U.S. subprime mortgage lender, said that it doesn't have the cash to pay creditors, including Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. The delinquency data is an early indicator of mortgage defaults, which would contribute to declines in a housing market already beset by falling prices and too much inventory.
The Mortgage Bankers survey is based on loans by mortgage companies, commercial banks, thrifts, credit unions and other financial institutions. The group will also report fourth-quarter foreclosures and loans entering foreclosure.
Early Delinquencies
Retsinas said he will focus on early delinquencies, those that occurred within three to six months after loans were made, because an increase in that figure indicates lax lending standards as opposed to overall weakness in the market, he said.
Fourth-quarter delinquencies are traditionally higher than the rest of the year as homeowners face the first home-heating bills of the winter at the same time they are spending money on Christmas presents, said Jay Brinkman, the Mortgage Bankers' vice president for research and economics.
``The delinquencies are going up, and the rate of the increase doesn't appear to have slowed down,'' said Grant Bailey, an analyst at Fitch Ratings. Delinquencies on subprime loans have doubled in the past 12 months, he said. ``So if you graph that, it's a pretty steep line.''
More than two dozen subprime lenders have been forced to close or sell operations as defaults on those mortgages have risen to a seven-year high. Subprime loans are often made to borrowers who make little or no down payment. In some cases, borrowers weren't even required to provide proof of income.
Subprime Loans
The portion of subprime loans more than 60 days delinquent or in foreclosure rose to 10 percent as of Dec. 31, from 5.4 percent in May 2005, the highest in seven years, according to data compiled by Friedman Billings Ramsey Group Inc. of Arlington, Virginia.
The number of U.S. foreclosures rose 42 percent to 1.2 million last year from 2005, according to Irvine, California- based RealtyTrac.
More than 5,600 workers have lost their jobs at Ameriquest Mortgage Co. in Irvine, California; Ownit Mortgage Solutions LLC and General Electric Co.'s WMC Mortgage Corp. in Woodland Hills, California; Mortgage Lenders Network USA Inc. in Middletown, Connecticut; and Fremont General Corp in Brea, California.
Countrywide Financial Corp., the biggest U.S. mortgage lender, said yesterday that late payments on home loans it manages were virtually unchanged last month. Loans at least 30 days past due remained at 4.71 percent of total loans serviced, the same as in January, the Calabasas, California-based company said. A year earlier, 4.29 percent of those loans were late.
"We see no evidence of significant rises in defaults in the regular loan market,'' said Joe Gyourko, a real estate and finance professor at the Wharton School at the University of Pennsylvania in Philadelphia.
NCaHome is a full service residential real estate brokerage charging only 1.5% commission. Professional real estate services for California buyers and sellers. Visit us today at www.NCaHome.com or call (707) 693-0200.
By Bloomberg Financial
(Bloomberg) -- Home loan delinquency rates released by the Mortgage Bankers Association may show an increase for a fourth straight quarter as subprime defaults ripple through the real estate market.
Past-due payments on 43 million loans tracked by the survey have climbed since a five-year boom in U.S. housing prices ended a year ago. In the third quarter of 2006, about 4.6 percent of mortgage holders were at least 30 days late, including about 2.4 percent of prime borrowers and 12.6 percent of subprime customers with poor or limited credit histories.
``The delinquencies and defaults have started to soar,'' said Nicolas Retsinas, director of Housing Studies at Harvard University in Cambridge, Massachusetts. ``A lot of these lenders started to make loans and lost track of some of the fundamentals.''
The delinquency data comes a day after New Century Financial Corp., the second-biggest U.S. subprime mortgage lender, said that it doesn't have the cash to pay creditors, including Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. The delinquency data is an early indicator of mortgage defaults, which would contribute to declines in a housing market already beset by falling prices and too much inventory.
The Mortgage Bankers survey is based on loans by mortgage companies, commercial banks, thrifts, credit unions and other financial institutions. The group will also report fourth-quarter foreclosures and loans entering foreclosure.
Early Delinquencies
Retsinas said he will focus on early delinquencies, those that occurred within three to six months after loans were made, because an increase in that figure indicates lax lending standards as opposed to overall weakness in the market, he said.
Fourth-quarter delinquencies are traditionally higher than the rest of the year as homeowners face the first home-heating bills of the winter at the same time they are spending money on Christmas presents, said Jay Brinkman, the Mortgage Bankers' vice president for research and economics.
``The delinquencies are going up, and the rate of the increase doesn't appear to have slowed down,'' said Grant Bailey, an analyst at Fitch Ratings. Delinquencies on subprime loans have doubled in the past 12 months, he said. ``So if you graph that, it's a pretty steep line.''
More than two dozen subprime lenders have been forced to close or sell operations as defaults on those mortgages have risen to a seven-year high. Subprime loans are often made to borrowers who make little or no down payment. In some cases, borrowers weren't even required to provide proof of income.
Subprime Loans
The portion of subprime loans more than 60 days delinquent or in foreclosure rose to 10 percent as of Dec. 31, from 5.4 percent in May 2005, the highest in seven years, according to data compiled by Friedman Billings Ramsey Group Inc. of Arlington, Virginia.
The number of U.S. foreclosures rose 42 percent to 1.2 million last year from 2005, according to Irvine, California- based RealtyTrac.
More than 5,600 workers have lost their jobs at Ameriquest Mortgage Co. in Irvine, California; Ownit Mortgage Solutions LLC and General Electric Co.'s WMC Mortgage Corp. in Woodland Hills, California; Mortgage Lenders Network USA Inc. in Middletown, Connecticut; and Fremont General Corp in Brea, California.
Countrywide Financial Corp., the biggest U.S. mortgage lender, said yesterday that late payments on home loans it manages were virtually unchanged last month. Loans at least 30 days past due remained at 4.71 percent of total loans serviced, the same as in January, the Calabasas, California-based company said. A year earlier, 4.29 percent of those loans were late.
"We see no evidence of significant rises in defaults in the regular loan market,'' said Joe Gyourko, a real estate and finance professor at the Wharton School at the University of Pennsylvania in Philadelphia.
NCaHome is a full service residential real estate brokerage charging only 1.5% commission. Professional real estate services for California buyers and sellers. Visit us today at www.NCaHome.com or call (707) 693-0200.
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