Mortgage Delinquencies Pile Up: Report
Same story, different month: delinquent mortgages continued to accumulate in February, which according to a top credit bureau executive, is an indication that the housing market has not yet seen its bottom. "I'm trying to find optimism in these numbers, but I'm pretty hard pressed to do that," said Dan Adams, president of U.S. Information Systems for Equifax Inc. Adams told Reuters that seven percent of homeowners with mortgages were at least 30 days late on their loans in February, up 50 percent from a year ago. If you break down the numbers, Adams said a whopping 39.8 percent of subprime borrowers were at least 30 days behind on their mortgage, which is a 23.7 percent jump from last year. And projections indicate that 30-day mortgage delinquencies will likely result in even more 60- and 90-day delinquencies. “The wheels just fell off the economy in the fourth quarter of 2008,” said James Chessen with the American Bankers Association last week. “The amount of job losses dealt the economy a severe shock, and that continues to be the biggest driver for delinquencies.” The U.S. economy lost nearly three million jobs in 2008, with nearly two million of them occurring in the fourth quarter. “As the economy continues to shed jobs, it is unlikely that delinquencies will see any improvements this year,” Chessen suggested. The Labor Department said Friday that employers cut 663,000 jobs in March, bringing the national unemployment rate to 8.5 percent. A glimmer of positive news, however, has recently sparked hope that the nation's housing market might be heading in the right direction. The Commerce Department reported last month that sales of new single-family homes climbed to an annual pace of 337,000 -- the highest in 10 months. In turn, homebuilder shares have increased about 45 percent since March 6, according to the Dow Jones U.S. Home Construction Index. But Adams told Reuters the continued increase in mortgage delinquencies revealed in his data foreshadows more foreclosures, short sales and home price declines as homeowners default and banks then repossess the homes to sell them at steep discounts. Write to Kelly Curran at email@example.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.