September showed a jump in new delinquencies on reworked mortgages held by bonds without government backing, according to JPMorgan Chase (JPM). The increase indicates that some of the fuel for the housing recovery may not be sustainable, according to an article on Bloomberg.
More than 28,000 modified home loans within so-called non-agency securities turned delinquent, a record 24% jump from the previous month, said analysts. A report by Bloomberg revealed a 0.44 percentage point increase for the share of all non-agency loans between 30 and 60 days past due. This pushes the loans to 3.54%, which is the highest it’s been since February 2010.
“We are now seeing a wave of re-defaults from the modifications over the last two years that failed,” the JPMorgan analysts said. “This wave should last through 2013.”
Shadow inventory fell to 2.3 million homes as of July. This number includes seriously delinquent loans, foreclosed homes and bank-owned properties that are yet to be listed.