Trouble at home

By: Paul Gores
Date: 21 August 2009
Source: Milwaukee Journal Sentinel Business Section

Among the 50 states and the District of Columbia, Wisconsin ranked 36th in delinquencies and 20th in foreclosure starts

The delinquency rate for mortgages in Wisconsin jumped in the second quarter, but the state still is faring better than the nation as a whole at keeping current on house payments. In the second quarter, 6.86% of all residential mortgage loans in the state were a least one month behind but not yet in foreclosure, the Mortgage Bankers Association reported Thursday. That’s up from 4.73% in the second quarter of 2008. Nationally, the delinquency rate was 8.86%, an increase from 6.22% during the same time last year. The seasonally adjusted national rate was 9.24%, breaking a record set in the first quarter of this year. The MBA’s delinquency rates for individual states aren’t seasonally adjusted. Among the 50 states and the District of Columbia, Wisconsin ranked 36th in delinquencies and 20th in foreclosures started in the MBA survey. Nationally, loans on which foreclosure actions were started during the second quarter amounted to 1.36%, down slightly from last quarter but up from 1.08% a year earlier. The percentages of loans at least 90 days past due and loans in foreclosure in the U.S. both hit new highs. “While the rate of new foreclosures started was essentially unchanged from last quarter’s record high, there was a major drop in foreclosure on subprime ARM loans,” said Jay Brinkmann, the MBA’s chief economist. “The drop, however, was offset by increases in the foreclosure rates on the other types of loans having the biggest increase. As a sign that mortgage performance is once again being driven by unemployment, prime fixed-rate loans now account for one in three foreclosure starts. A year ago they accounted for one in five.” In Wisconsin, 4.35% of prime mortgages – the kind offered to the most credit worthy borrowers – were at least one month overdue, compared with 6.01% for the U.S. about 25 of every 100 subprime mortgages – higher interest rate mortgages sold to people with shakier credit histories – in the state were in the arrears in the second quarter. Wisconsin’s 25.14% delinquency rate on subprime mortgages compares with the national rate of 24.46%

Foreclosures Hit Record

What happened? A quarterly report released Thursday by the Mortgage Bankers Association found that more than 13% of American homeowners wtih a mortgage have fallen behind on their payment or are in foreclosure.
What does it mean? It’s another record, and an indication that the foreclosure crisis is still getting worse as layoffs continue to soar.
What’s next for the economy? Foreclosures won’t stop rising until around six months after layoffs peak. And economists don’t expect unemployment, now at 9.4% to crest until winter at the earliest.