The MBA released delinquency and foreclose data for the 4th quarter of 2007 today. Both measures rose, with foreclosures reaching an all-time high. New foreclosures rose to 0.83, from 0.54 a year ago, a 54% increase. The share of all home loans with payments over 30 days late (delinquent)) rose to 5.82%, from 5.59% in the third quarter, to rise to the highest level since 1985. The peak in the 1980s was 6.07%.
Delinquency data excludes homes that are already in foreclosure. Versus the 4th quarter of 2006, delinquency rates have risen to .87%. Delinquencies have risen in every category except for VA loans. Prime loan delinquencies rose +.12% to 3.24% while subprime loan delinquencies rose 100bp to 17.31%. States with the highest overall delinquency rates were Mississippi at 11%, Michigan at 9%, and Georgia at over 8%. The states with the most homes in foreclosure include Ohio at 3.9%, Indiana at 3.5%, and Michigan at 3.4%. Based on rising foreclosure starts, Nevada and Florida will soon be joining these lists.
Many borrowers with ARMs appear to simply be walking away from their homes, even before their ARM rates reset, on the realization that they simply bought more house than they can afford to maintain, according to the MBA. There data indicates that about 40% of all new foreclosures of both prime and subprime mortgages fit this category. About 23% of the new defaulters had benefited from some form of loan modification, such as lower or frozen interest rates, before defaulting. Clearly, there are a large number of home owners who bought more house than they could afford on too easy of credit terms during the boom.
Based on a sample size of 50 million loans, this suggests that 400k homes entered foreclosure in the 4th quarter. This is a lower figure than RealtyTrac, which estimated 640k.
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