Home delinquency rate increases

Smart Real Estate News & Commentary by Chris McLaughlin July 7, 2010

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Home delinquency rate increases

According to a report by Lender Processing Services, Inc. (LPS), there’s a 2.3% month-over-month increase in the nation’s home loan delinquency rate to 9.2% in May 2010, and early-stage delinquencies are increasing as normal seasonal improvements taper off. This report includes data as of May 31, 2010.  According to the Mortgage Monitor report, the percentage of mortgage loans in default beyond 90 days increased slightly, while both delinquency and foreclosure rates continue to remain relatively stable at historically high levels. There are currently more than 7.3 million loans currently in some stage of delinquency or REO.  The report also shows that the average number of days for a loan to move from 30-days delinquent to foreclosure sale continues to increase, and is now at an all-time high of 449 days, resulting in an increase in “shadow” foreclosure inventory. 

After a two-month decline, deterioration ratios increased, with 2.5 loans rolling to a “worse” status for every one that has improved. The number of delinquent loans that “cured” to a current status declined for every stage of delinquency, except in the “greater than six months delinquent” category.  This improvement was likely the result of trial modifications made through the Home Affordable Modification Program (HAMP) that transitioned into permanent status.  LPS manages the nation’s leading repository of loan-level residential mortgage data and performance information from nearly 40 million loans across the spectrum of credit products.  Diana Olick says, “Oh good, so the HAMP program is helping “cure” those 6 month+ delinquencies. No, they’re just delaying them yet again, since we know that the re-default rate on HAMP is only rising. Forget cure and think remission.”

MBA – Refinances increase

The Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 2, 2010 increased 6.7% on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 6.5% compared with the previous week.  The Refinance Index increased 9.2% from the previous week and is the highest Refinance Index observed in the survey since the week ending May 15, 2009. The seasonally adjusted Purchase Index decreased 2.0% from one week earlier. The Purchase Index has decreased eight of the last nine weeks.  The unadjusted Purchase Index decreased 2.3% compared with the previous week and was 34.7% lower than the same week one year ago.  “Mortgage rates remained near record lows last week, as incoming data on the job and housing markets were weaker than anticipated.  As more homeowners locked in to these low rates, the level of refinance applications increased to a new 13-month high,” said Michael Fratantoni, MBA’s Vice President of Research and Economics. 

“For the month of June, purchase applications declined almost 15% relative to the prior month, and were down more than 30% compared to April, the last month in which buyers were eligible for the tax credit.”  The four week moving average for the seasonally adjusted Market Index is up 6.4%.  The four week moving average is up 0.1% for the seasonally adjusted Purchase Index, while this average is up 8.3% for the Refinance Index.  The refinance share of mortgage activity increased to 78.7% of total applications from 76.8% the previous week, which is the highest refinance share observed in the survey since April 2009. The adjustable-rate mortgage (ARM) share of activity increased to 5.4% from 4.7% of total applications from the previous week.

Credit card delinquencies down

The American Bankers Association (ABA) says the number of consumers behind on their credit card payments fell to an eight-year low in the first quarter of 2010, and delinquencies across a wide-range of consumer debt categories have also fallen.  High unemployment and plummeting home values during the financial meltdown appear to have spurred consumers to shore up their finances and banks to limit their lending, resulting in fewer Americans being late with payments, the industry group said. 

About 3.88% of bank credit card accounts were past due by 30 days or more in the first quarter of the year — the first time since 2002 that the rate has fallen below 4%, the ABA said Wednesday.  And ABA’s composite ratio, which tracks delinquencies across eight key categories, fell to 2.98% from 3.19% the previous quarter — a sign of modest improvement in the U.S. economy, the group said.  “Consumers are doing a much better job managing their finances, building their savings and spending and borrowing less,” ABA Chief Economist James Chessen said.  The Commerce Department’s most recent reports on personal spending and income also showed that consumers stashed a higher portion of their earnings into savings in May than they did a month earlier.

Shopping center vacancies rise

According to research firm Reis Inc, the vacancy rate in U.S. strip centers during the second quarter rose 0.10 percentage point from the first quarter to 10.9%, slightly below the 11% in 1991 during the prior real estate bust, according to the Reis quarterly report, released on Wednesday.  Retailers gave up 1.85 million square feet of occupied space in the second quarter at neighborhood shopping centers, while developers opened less than 400,000 square feet of new strip mall space.  That compares with an average of about 7 million to 8 million square feet of shopping centers built each year from about 2001, according to Reis. 

Asking rents fell 0.3% from the first quarter to $19.07 per square foot, the lowest since the end of 2006.  Factoring in months of free rent and other perks landlords offered to attract and retain tenants, effective rent fell 0.5% to $16.58 per square foot, the lowest in nearly five years.  Reis said that roughly half of its clients plan to take advantage of the cheap rents in their expansion plans.  At large U.S. malls, the vacancy rate rose 0.10 percentage point from the first quarter to 9%, the highest since the first quarter 2000, when Reis began tracking regional malls. Asking rent fell 0.2% to $38.72 per square foot, marking the seventh straight quarter of decline. Asking rent was the lowest in more than four years.

Now for our real estate education section…

Stats, Facts & Other Social Media Solutions

Are you putting the power of social media marketing to work for your real estate business? If not now-when? If you have been sitting on the sidelines waiting for the perfect time to take the plunge, here are a few stats and facts that should provide all the inspiration required:

Inclusive…

• 77% of Internet users rely upon blogs for information…roughly 80% of real estate buyers and sellers make first contact with an agent via by reading their blogs first.
• The average social media user has 195 friends they routinely communicate with an average of 1 to 2 x per week.
• Mobile Facebook users are twice as active as non-mobile users. Only one of every four Twitter users interact via the web interface.

Exclusive…

• Over 60% of Twitter users are outside of the USA.
• Over half of YouTube users are under 20 years of age.

Take Away’s…

1. Make mobile a priority when using social media websites. Mobile users on both Facebook and Twitter are more active, linked to more people and increasingly interact exclusively via applications outside of the web interface.

2. International real estate sales and market must use Twitter.

3. UTube is especially geared toward a younger audience.

4. Blogs are a ‘must have’ for building relationships.

5. Put an “I” in social media marketing. Effective marketing is an extension of your professional “voice” but that doesn’t meant it must take a lot of time and effort. Learn how to put the power of social media marketing to work for your real estate endeavors by joining one of our webinars or other informational sessions.

See you at the top!

Chris McLaughlin
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All Rights Reserved.

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About the author:

Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.

    * As the top Florida foreclosure and pre-
      foreclosure expert, he oversees more than
      100 short sale & REO closings each month
   * Long-time authority on real estate investing
      and rapid reselling of distressed homes.  Owns
      portfolio of nearly 100 high-value, high-profit
     properties
    * Owner of one of Florida’s largest Real Estate firms,
     running 4 different offices, supporting over
     400 agents, uniquely positioning him to help
     thousands of investors make money in the
     biggest market opportunity ever!
    * Highly sought-after speaker, consultant, and
      seminar leader for current trends and hot topics
      in Real Estate Investing, Entrepreneurship, and
      Wealth Building
    * Follow me on Twitter: http://twitter.com/mclaughlinchris
    * Join my Facebook Fan Page: http://www.mclaughlinchris.com
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