Tag Archives: Mortgage Debt

The average American's financial situation improved during the third quarter, according to data released by the Federal Reserve. The news is seen as a positive sign for the nation's mortgage markets, which have been stressed by an elevated number of borrowers struggling to fulfill their mortgage obligations because of deteriorating personal finances. The Fed says household wealth grew by 2.2 percent, or $1.2 trillion, during the third quarter as stock market gains offset the $700 billion that was lost on real estate assets.

Americans are less certain that the housing market has found its floor, and continue to be wary of buying a home. Those are the findings of Fannie Mae's most recent nationwide housing survey. The GSE says consumer attitudes about the housing market are more negative since its second-quarter poll, but the declining optimism is reinforcing realistic attitudes toward owning and renting. For the first time, delinquent borrowers are more likely to say they would rent rather than buy their next home.

The overall financial health of consumers showed incremental improvements in the first half of 2010, but that progress was wiped out during a span of three months due to weaker household budgets, renewed strains on housing costs, and high levels of unemployment, according to the nonprofit credit counseling agency CredAbility. The average U.S. consumer has been in financial ""distress"" for nine consecutive quarters, with consumers in some parts of the country headed for financial ""crisis.""

Third-quarter delinquency rates for both residential and commercial mortgages will increase, particularly among smaller lenders, according to preliminary estimates released by Foresight Analytics. Final figures for the third quarter 2010 are not due out until late November, but based on earnings reports and call report filings from many smaller banks, Foresight Analytics offers its advance estimates of what we'll see in the final mortgage delinquency numbers for the July to September time period.

During the third quarter, 2.7 percent of current mortgage balances transitioned into delinquency, according to the New York Federal Reserve. That's up from 2.6 percent that became newly delinquent in the second quarter. Fed officials called the increase ""slight"" but noted that the rise follows a full year of declines in new delinquencies. According to the federal bank's report, about 457,000 individuals received home foreclosure notices on their credit reports between July 1 and September 30, 2010.

Consumer default rates declined in September across certain structured finance categories, including first- and second-lien mortgages, according to a report issued Thursday by Standard & Poor's. The improvements, which S&P's data shows have continued since last year, came despite a national unemployment rate that is still near its recession peak. The agency's analysts explained that job growth typically lags an economic recovery, and noted tighter underwriting standards are having a positive effect.

The number of consumers rolling their delinquency status on mortgage payments from 30 to 60 days past due and 60 to 90 days past due peaked in July 2009, according to a new study from TransUnion. It's interesting to note that the National Bureau of Economic Research has declared the end of the nation's latest recession to be June 2009, one month before the roll-rate crest. TransUnion says although we may have left the worst of the recession behind, from a credit perspective we were just hitting the toughest period for consumer default.

The credit bureau TransUnion says U.S. consumers are less of a credit risk now than they were in 2009 and earlier this year. The agency's proprietary Credit Risk Index declined 0.9 percent between the first and second quarters of 2010. The drop was more than double the decrease observed between the fourth quarter of 2009 and the first quarter of 2010. TransUnion says it signals that ""a broad improvement in consumer credit conditions is finally taking root.""

Arizona-based Sand Capital recently announced the company's acquisition of more than $100 million in distressed debt and REO properties. The company says the economic conditions present in the market for the last two years have created a once-in-a-quarter-century opportunity. Sand Capital has been acquiring commercial, residential, office, and industrial real estate assets since November 2008, has added 1.2 million square feet to its portfolio.

Fannie Mae has conducted a poll of both homeowners and renters to gauge consumers' attitudes toward housing in the U.S. The results indicate that Americans have become more cautious about buying a home, though most believe the market has bottomed out. Rents are expected to increase more than home prices, and Fannie says mortgage borrowers, and even underwater borrowers, are less discouraged about homeownership than delinquent borrowers and renters.