While the total number of American households behind on mortgage payments went up again in the first quarter of 2010, and this time to record heights, the Mortgage Bankers Association (MBA) is also predicting that the nation’s problems may be starting to ease.
Meanwhile the growing rate of delinquency is alarming economists who prefer a straight line between economic growth and honored credit.
The seasonally adjusted rate published by the MBA reflects that 10% of all indebted American households are in financial difficulty – that’s up from 9.1% the same time last year, and 9.5% from the last quarter of 2009. Nevertheless, the Group’s Chief Economist Jay Brinkmann believes the rate of increase is slowing down.
“We are in extraordinary times,” he says. “How much of the change is being driven by seasonal factors or the fundamental changes in the trend is unclear … if mortgage delinquencies are not yet clearly improving, it also appears they are not getting worse. However, a bad situation that is not getting worse is still bad.”
That’s great techno speak from an acknowledged expert in his field. But of what use are his platitudes to otherwise impeccably decent American borrowers who have no hope of recovering their delinquent situation?
Around 68% of troubled households are three or more payments behind. Approximately 4.6% of mortgages are currently in the foreclosure pipeline, the end of which discharges straight into the Sheriff’s in-tray. This is about the worst it’s ever been – the rate was 3.9% last year. The worst affected area continues to be Washington where 10.4% of borrowers are now in trouble compared to 9% year-on-year. The rate in Virginia is 9.4% (up from 8.3%) while Maryland is the region’s black sheep with 13.8% for the first quarter of 2010 compared to 11.3% last year.
While modest but welcome improvements in the American economy have helped some borrowers stay out of the foreclosure courts, banks have been getting more aggressive lately as is reflected in their increased foreclosure activity. Mary Hunter, who’s a Director of the Hyattsville Housing Initiative Partnership, was showing signs of strain the other day.
“The people who have fallen into delinquency have slowed down,” she said, “but the other side of the process is speeding up.”
Bank foreclosures continue to be a thorn in Washington’s side despite an exceptional federal program that includes paying them to reduce borrowers’ monthly payments. Approximately 300,000 sinking households are now shored up by permanent loan modifications – more could have been assisted if somebody had better explained the process to them. What a shame the government forgot to tell them how to do it properly.
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