Foreclosures fall but new delinquencies up: MBA

NEW YORK Thu Aug 26, 2010 3:02pm EDT

NEW YORK (Reuters) - The number of U.S. homes headed for foreclosure fell during the second quarter, marking the first such drop since the housing slump began in 2006, but the improvement may be fleeting as the number of newly delinquent homeowners rose, a banking group said on Wednesday.

The percentage of loans in the foreclosure process declined last quarter to 4.57 percent from 4.63 percent in the first quarter, partly because of lender efforts to ease payments for homeowners and the impact of temporary home purchase tax credits, the Mortgage Bankers Association said in a report.

Foreclosures could head higher in coming months, however, as the percentage of borrowers at least one payment behind resumed its rise after easing late last year, the MBA said in a report that covers more than 85 percent of the market.

The pipeline of delinquencies and huge rise in properties on balance sheets of financial institutions last quarter has aggravated concerns that the critically important housing sector will drag the U.S. economy back into recession.

Foreclosures have also taken a toll on consumer confidence and are steering buyers away from the market as they expect the supply to pressure prices still lower. The "shadow inventory" of homes likely headed to market is about 4.5 million, Michael Fratantoni, vice president for single-family research and policy development at the MBA, said on a conference call.

"On the surface, there is good news on the foreclosure front, but not on short-term delinquencies," said MBA Chief Economist Jay Brinkmann. "There's a little pause. It could be short-term factors instead of a trend."

The number of loans 30 days past due, at 3.51 percent last quarter versus 3.45 percent in the first, show a correlation with the recent rise in unemployment benefit claims, he said.

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Comments (2)
KLESolutions wrote:
Comcast has been running an interesting article on it’s daily headline banners with reason not to run out on Foreclosures.

While Forclosure can be traumatic, we still need to face up to our obligations, and see what we can do to responsibly settle these issues.

Aug 26, 2010 11:33am EDT  --  Report as abuse
agarcia73 wrote:
If you want more of something, create a government subsidy. The more benefits we give to people choosing to stay unemployed, and choosing to just stop paying the mortgage and wait to get kicked out, the longer this will continue.

Cut off the unemployment, give the banks the right to collect full market rent on a property even after foreclosure, and a lot of this stuff will correct itself.

I post notices on doors of people who have not paid a dime for a year, sometimes longer, and they quite often comment, I was wondering when this day would come. So, after freeloading for a year, they then want re-location assistance. Good grief! No wonder they stop paying! It’s profitable!

Aug 26, 2010 12:52pm EDT  --  Report as abuse
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