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Thread: Serious Mortgage Delinquencies Fall to Lowest Since 2008

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    Serious Mortgage Delinquencies Fall to Lowest Since 2008

    The main thing still holding the US economy back, other than the recession in Europe and slowdown in Asia, is weakness in the housing and construction sectors. Fortunately for us these areas are beginning to rebound, which will hopefully more than make up for manufacturing losses due to weakness elsewhere.

    The rate of seriously delinquent U.S. mortgages, a proxy for the so-called shadow inventory of homes, fell to the lowest since 2008 as employment improved and recovering housing demand made it easier for homeowners to sell.

    The percentage of home loans that were more than 90 days behind or in the foreclosure process fell to 7.03 percent in the third quarter from 7.31 percent in the previous three months, the Mortgage Bankers Association said in a report today. The rate was 7.89 percent a year earlier.

    Delinquent homeowners are catching up on payments or finding alternatives to foreclosure as the economy improves. That’s helping to reduce shadow inventory -- typically defined as homes with seriously delinquent mortgages, in foreclosure or held by banks and not for sale -- and limiting the prospect that distressed properties will flood the market and depress prices.

    “The drop of the shadow inventory is a real positive for the housing market because it reduces concerns that this backlog will be with us,” Michael Fratantoni, the Mortgage Bankers Association’s vice president of research and economics. said in a telephone interview today from Washington.
    Serious Mortgage Delinquencies Fall to Lowest Since 2008 - Bloomberg
    Economy Has Green Shoots From China to U.S. as Data Surprise - Bloomberg
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Serious Mortgage Delinquencies Fall to Lowest Since 2008

    Quote Originally Posted by AdamT View Post
    The main thing still holding the US economy back, other than the recession in Europe and slowdown in Asia, is weakness in the housing and construction sectors. Fortunately for us these areas are beginning to rebound, which will hopefully more than make up for manufacturing losses due to weakness elsewhere.

    Economy Has Green Shoots From China to U.S. as Data Surprise - Bloomberg
    That's good news. But until consumers find some money to spend, it won't make a lot of difference. The home equity loan ATM is pretty much closed.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: Serious Mortgage Delinquencies Fall to Lowest Since 2008

    Once you foreclose on all the people who had no business owning a house, delinquencies go down.

    File this under "duh".

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    Re: Serious Mortgage Delinquencies Fall to Lowest Since 2008

    Quote Originally Posted by Erod View Post
    Once you foreclose on all the people who had no business owning a house, delinquencies go down.

    File this under "duh".
    That's part of it. Another part is that real estate prices have started rising, which means that fewer home owners are under water. And consumers generally have reduced their debt considerably over the last four years.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Serious Mortgage Delinquencies Fall to Lowest Since 2008

    Quote Originally Posted by AdamT View Post
    That's part of it. Another part is that real estate prices have started rising, which means that fewer home owners are under water. And consumers generally have reduced their debt considerably over the last four years.
    Being underwater is only meaningful if you can't afford your payment.

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    Re: Serious Mortgage Delinquencies Fall to Lowest Since 2008

    Quote Originally Posted by Samhain View Post
    Being underwater is only meaningful if you can't afford your payment.
    No. That's not true. And that's not what's been happening.

    If I owed $200,000 on a home that was worth only $150,000, I would be a fool to pay my mortgage even though I could afford it. People are making business decisions to let their homes go into foreclosure whether they could afford the payment or not.

    Some even bought another home before they went into foreclosure so they could buy at today's prices. Combine that possibility with the ability to get a new mortgage two years out of foreclosure, and people are making these kinds of business decisions all the time.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: Serious Mortgage Delinquencies Fall to Lowest Since 2008

    Quote Originally Posted by MaggieD View Post
    No. That's not true. And that's not what's been happening.

    If I owed $200,000 on a home that was worth only $150,000, I would be a fool to pay my mortgage even though I could afford it. People are making business decisions to let their homes go into foreclosure whether they could afford the payment or not.

    Some even bought another home before they went into foreclosure so they could buy at today's prices. Combine that possibility with the ability to get a new mortgage two years out of foreclosure, and people are making these kinds of business decisions all the time.
    Except then they aren't in that home, and they have ****ty credit now. If they make the correct choice, and just continue paying their mortgage, their credit is just fine, and they still have a house.

    That's the problem with some of these people that make the choice you've referenced: They have no freaking patience. That's what you get in a society that is tuned for instant gratification. If they had 2 more brain cells to rub together, they would realize that in 3-5 years time, their property value would start to appreciate, and they wouldn't be underwater.

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    Re: Serious Mortgage Delinquencies Fall to Lowest Since 2008

    Quote Originally Posted by Samhain View Post
    Except then they aren't in that home, and they have ****ty credit now. If they make the correct choice, and just continue paying their mortgage, their credit is just fine, and they still have a house.

    That's the problem with some of these people that make the choice you've referenced: They have no freaking patience. That's what you get in a society that is tuned for instant gratification. If they had 2 more brain cells to rub together, they would realize that in 3-5 years time, their property value would start to appreciate, and they wouldn't be underwater.
    The "problem" is that these people are making sound business decisions. Having their credit dinged by foreclosure is a minor inconvenience. Two years out, they can buy another home. If we are *lucky* we'll see 3% appreciation on homes in the future. Why should I overpay for my home to the tune of 25%? It's not patience. It's business sense.
    The devil whispered in my ear, "You cannot withstand the storm." I whispered back, "I am ​the storm."

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    Re: Serious Mortgage Delinquencies Fall to Lowest Since 2008

    Quote Originally Posted by MaggieD View Post
    No. That's not true. And that's not what's been happening.

    If I owed $200,000 on a home that was worth only $150,000, I would be a fool to pay my mortgage even though I could afford it. People are making business decisions to let their homes go into foreclosure whether they could afford the payment or not.

    Some even bought another home before they went into foreclosure so they could buy at today's prices. Combine that possibility with the ability to get a new mortgage two years out of foreclosure, and people are making these kinds of business decisions all the time.
    Yeah, it has lots of consequences. One anecdotal example: a friend of mine has a house that's deeply under water with his former partner. That house is presently vacant. My friend is disabled as a result of a brain tumor and he really needs to sell his main residence, which he could do at a profit, so he can move to something more affordable and easier to manage. But he's essentially trapped in his current house, which is homesteaded, until he can get out from under the the other house. If he sold his main residence first, the bank would just go after his profits and he'd wind up worse off. He's in the process of selling the under water house through a short sale.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Serious Mortgage Delinquencies Fall to Lowest Since 2008

    Quote Originally Posted by AdamT View Post
    That's part of it. Another part is that real estate prices have started rising, which means that fewer home owners are under water. And consumers generally have reduced their debt considerably over the last four years.
    I think part of the reason why consumers have reduced their debt considerably over the last four years is because credit is so much harder to obtain.
    The Definition of Insanity: doing the same thing over and over again and expecting different results.
    Albert Einstein

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