The odds that unemployment, an end of the federal government’s home buyer tax credit, and a failure of the HAMP program are doing more damage to home owner financials appears to rise each month.
The MBA reported that in the first quarter:
The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.54 percent, a decrease of 13 basis points from last quarter, but an increase of 230 basis points from the first quarter of last year.
Most of the trouble in the home loan business continues to be at the low end, subprime portion of the market:
On a seasonally adjusted basis, the delinquency rate stood at 6.17 percent for prime fixed loans, 13.52 percent for prime ARM loans, 25.69 percent for subprime fixed loans, 29.09 percent for subprime ARM loans, 13.15 percent for FHA loans, and 7.96 percent for VA loans.
The ARM problem is likely to get worse as mortgages written three and five years ago continue to reset throughout this year and next. There is no evidence the subprime delinquencies will improve either. Many of these borrowers are at the bottom of the income scale-a sector where unemployment is especially high.
Douglas A. McIntyre
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