The folks over at have put out their latest monthly press release, singing a decidely different tune than last month's release, which had called the housing crisis 'overblown':
The foreclosure pox continues to spread unchecked across the country despite efforts by government and industry to stop it. 3 out of every 1,000 homeowners in the United States lost their homes to foreclosure in the first half of the year. That's up 41 percent compared to the same period last year ... These per capita numbers translate to almost a quarter-million residential properties (247,907) that ended up in the hands of banks or lenders this year because homeowners couldn't get their mortgage default problems solved ...
I think the tone of this month's release is much more in line with what I've been hearing from contacts in the foreclosure and REO industry -- all of whom are dealing with a flood of properties that they've told me far surpasses the stuff they saw in the mid-1990s. Towards that end, the press release also highlights the long legs the current bear market for housing would appear to have:
The first six months pre-foreclosure filing numbers are also grim. These are the homeowners who have defaulted on their mortgages but haven't yet lost their homes to foreclosure. Nationally, nearly 7 out of every 1,000 households (more than 507,000) were forced to deal with the threat of foreclosures year to date.
I'd add to that: the current weakness in the 2006 subprime vintage will become even more apparent in 2008, as resets kick in, which would give the current market woes some way to go before we start to see marked improvement (although we may see a breather towards the back half of this year). Comparing this month's press release to last, some very divergent opinions emerge. This month:
... foreclosure numbers keep rising; the effects of the sub-prime lender debacle have spilled over into other mortgage markets like Alt-A ... and some analysts even predict the increased tightening of lending practices may actually have a detrimental affect on homeownership overall.
Compare that opinion with McGee's position last month:
“…don't be fooled by the numbers. The overall economy is sound, and markets will turn around,� says Alexis McGee ... “Even the Mortgage Bankers Association's just-released Mortgage Delinquency Survey reported that except for several key states, overall mortgage delinquency rates dropped in first quarter 2007 over fourth quarter 2006 numbers,� says McGee.
Perhaps the new market reality has sunk in with McGee and the rest of the folks at, or perhaps the numbers aren't looking as good as they had expected. Either way, this month's press release appears to be singing not just a different tune, but an entirely new album. Both Tim and Alexis McGee have frequented this blog in the past, so if they're willing to comment, I'm sure they might have some additional insight to add here as to what's driven their apparent turn in opinion. My guess is that the numbers are looking far worse than they had expected. I also hope they're paying much closer attention to how the MBA is coming up with its numbers, since I've got some questions as to the methods used by MBA analysts to arrive at the conclusions put out there for its most recent delinquency report (see some of my earlier comments). At best, some of the methods used would appear to be flawed -- at worst, conclusions based on these flawed methods are flat-out wrong.