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Mortgage Delinquencies Rose In The First Quarter

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By any measure, great numbers of people are having trouble paying their mortgages. What is less clear is the extent to which the problem is getting worse, better or is simply holding its own.

Data released Wednesday by the Mortgage Bankers Association showed the mortgage delinquency rate rose in the first quarter to 10.06 percent of all loans outstanding from 9.12 percent in early 2009.

But comparisons with the last quarter of 2009 are much blurrier. Adjusted for seasonal variations the delinquency rate got worse. The raw data, on the other hand, showed a marked improvement.

The banking group, warning that “fundamental market factors” might be exercising undue influence over the seasonal numbers, said it did not know whether the optimistic or pessimistic sequence was more accurate.

“Discerning what represents a fundamental improvement versus a simply seasonal improvement is probably more of an art than a mathematical science at this point,” the group’s economist, Jay Brinkmann, said in a statement.

The bankers define delinquency as being at least one payment behind but not yet in foreclosure. The percentage of loans in foreclosure increased to 4.63 percent in the first quarter from 3.85 percent in the first quarter of 2009. However, it was essentially flat with the rate at the end of the year, indicating a possible leveling off.

Several broad trends are visible from the data. The widest possible range of people in trouble — ranging from those who have missed one payment to those awaiting eviction — remains about one in seven of the 52 million households with mortgages.

While fewer people are entering this group, thanks to an economy that is stabilizing, not many seem to be leaving it either. The government’s efforts to encourage lenders to modify loans is leaving a lot of strapped borrowers in limbo, for better or worse.

For the foreclosure crisis to truly abate, employment and wages must grow.

What started as a subprime crisis, where borrowers defaulted because they could not handle the payment shock as their loans reset, has now made a full transition into a crisis among prime borrowers, who lose the ability to pay their loans when they lose their jobs.

The percentage of new foreclosures in the first quarter that were prime fixed rate loans — traditionally the most conservative kind of mortgage — was 36.7 percent, up from 28.9 percent last year. Meanwhile, the rate for subprime loans fell.

“If mortgage deliquencies are not yet clearly improving, it also appears they are not getting worse,” Mr. Brinkmann said. “However, a bad situation that is not getting worse is still bad.”

The delinquency recovery.

Looks like the option ARM resets haven't cause any sort of problem yet....

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Re option arm, didn't most of the resets begin this year?

Don't most of the people with them have more money than sub-prime borrowers?

If so we can expect things to take longer to hit the fan especially with the political measure taken to try and offset things.

Maybe it won't happen but I am a long way from hearing that.

The message I get is,

"Wait for it ..."

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