Archive for January, 2011
Home loans made by state housing finance agencies are performing worse than those made by others in the state for the first time since Standard & Poor's started tracking the data in 2006.
Not only that, after five years of tracking, the HFA delinquency rate is now at it highest point.
As of the third quarter of 2010, 7.12% of HFA mortgages were 60 days or more delinquent, up 0.45% from the second quarter. Delinquencies were up 1.21% from a year earlier. The HFA rate was only 3.12% five years ago when S&P began collecting this data.
Comparatively, the state mortgage loan delinquency rate was 6.97% in 3Q, down about 0.29% from the previous quarter.
State HFAs issue tax-exempt bonds to finance loans for borrowers and first-time buyers purchasing a home at a reduced interest rate. The entities are often in charge of giving out government assistance to the unemployed, in order to make mortgage payments on time.
S&P said the issue with rising HFA delinquencies is widespread across the nation and directly correlated to the unemployment rate.
"In our view, the increase in HFA delinquencies is not surprising given the continued high unemployment rates," the firm wrote in the report, adding that it expects unemployment to remain above 9% through 2011.
Nearly three-fourths of HFA programs, a total of 24 programs, experienced an increase in delinquency rate during the third quarter, while only nine saw a decrease. This is the second consecutive quarter rates climbed in more than 20 bond programs, according to S&P. Thirteen HFA bond programs had higher delinquency rates than state loans, up from nine programs in the second quarter.
Kentucky's housing finance agency had the most delinquencies, up to 17.9%, followed by California (13.9%), Georgia (13.5%), Michigan (12.2%), and New Jersey (11.9%). The five states with the lowest delinquency rates in 3Q were two different agencies in Alaska at 1.7% and 2.3% delinquent, two in Wisconsin at 2.1% and 2.2%, and one in South Dakota at 2.8%.
S&P made one positive note concerning delinquency spreads, in the report. Year-over-year 3Q HFA delinquencies grew 1.21%, which is down from the second quarter spread, 1.37%.
"This was the second consecutive quarter in which the year-over-year growth in HFA loan delinquency slowed," S&P said. "We view this as a positive sign."
S&P removed real estate owned assets from the delinquency status of HFA loans in the third quarter to make the data more comparable to the state data.
Write to Christine Ricciardi.
Follow her on Twitter @HWnewbieCR.
As the financial crisis was about to explode, Merrill Lynch kept secret from analysts and investors that it had $30.4 billion in mortgage-related securities on its books — an amount that “startled” the firm’s CEO Stanley O’Neal, according to documents and interviews released by a fact-finding panel.
The Financial Crisis Inquiry Commission on Thursday released a widely anticipated report on the causes of the 2008 economic meltdown.
The panel focused a section of its report on interviews with Merrill Lynch executives and power-point presentations they produced demonstrating that top officials knew the company was heavily exposed to collateralized debt obligations, a type of security often composed of the riskier portions of mortgage-backed securities, but did not disclose that information to investors.
Both the expiration of the homebuyer tax credit in the spring and the robo-signing scandal in the third quarter left their marks on the market in December, according to the Obama administration's most recent housing scorecard.
New and existing home sales increased during the month, but still remained below levels seen in the first half of 2010. According to federal data, 27,400 new homes sold during December along with 440,000 existing homes. During the same period of 2009, almost 30,000 new homes and 453,000 existing homes sold.
Foreclosure activity, including starts and completions, remained well below transaction levels seen in the first 10 months of the year. In November, the housing scorecard reported a 21% in foreclosure activity due to lenders recalling and reviewing foreclosure affidavits.
Housing remained extremely affordable in December, as mortgage interest rates hovered near record lows. But the housing market "remains fragile," the scorecard said, because of unsettled home prices nationwide. The scorecard reported the rate for a 30-year fixed mortgage rate at 4.74%, down from 4.99% a year earlier.
The median existing-home sale price in November was $168,000, according to the National Association of Realtors, down from $170,600 the prior month. Home prices were hurt by the number of discounted distressed home sales that took place.
At last year's end, 4.7% of prime mortgage loans were delinquent as well as 36% of subprime mortgage loans and 12.8% of loans backed by the Federal Housing Administration, according to the scorecard.
More than 4.1 million modification arrangements were started between April 2009 and the end of November 2010 — more than double the number of foreclosure completions during that time. These included more than 1.4 million trial Home Affordable Modification Program starts, more than 650,000 Federal Housing Administration loss-mitigation and early-delinquency interventions, and more than 2 million proprietary modifications under Hope Now.
The Department of Housing and Urban Development and the Treasury Department compiled data for the monthly scorecard. HUD Assistant Secretary Raphael Bostic commended the administration on its efforts to offer alternatives to foreclosure, but acknowledged that there is still more work to be done.
"We know that many responsible homeowners are still fighting to make ends meet," Bostic said. "Over the last 20 months, the Obama Administration has confronted the nation’s housing crisis with an unprecedented effort to promote stability in the market — keeping millions of families in their homes and helping millions more to save money by refinancing. But the data clearly show that the market remains extremely fragile."
Write to Christine Ricciardi.
Follow her on Twitter @HWnewbieCR.
