A new record was set in third quarter, with mortgage delinquencies up 6.99% from the previous quarter to 6.41% of all loans outstanding. As the economy recedes, these numbers can only go higher. With record number of job losses, companies closing their door, and even The Big Three begging at Washington’s doors, it is no surprise that we see this happening. Without work and only unemployment benefits to sustain them, the average citizen will be lucky to keep food on the table, let alone make a mortgage payment. There appears to be no sign right now of this letting up.
The index that measures these stats was formed in 1979. To put things in perspective, note that from just one year ago, the number of people who is at least one payment behind has risen 128 basis points. This data comes from the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The report was released last Friday.
Total foreclosures rose to a record high at 2.97% in the third quarter. In the previous quarter, it stood at 2.5%, and in Q3 of 2007, it stood at 1.69%. Jay Brinkmann, MBA chief economist, had this to say about the current crisis: “In the last quarter we saw about 575,000 foreclosure actions started, compared with an estimated 580,000 in the second quarter and 535,000 in the first quarter. At this rate we are looking at finishing 2008 at about 2.2 million foreclosure actions started.” Definitely not good news, no matter how you look at it.
The MBA collects its data from a variety of sources - mortgage companies, commercial banks, thrifts, credit unions and others in the mortgage lending field. I don’t think that there is any way that we are near a bottom yet, and many analysts, including Brinkman, agree. Until something is done to stop the hemorrhaging on Main Street, the recession will continue at industrial strength. It is not up to taxpayers to bail these people out, but then again, it is not up to taxpayers to bail out the likes of AIG and The Big 3. If something isn’t done to make this go away, I am fearful that this country is in for very bad times, indeed.
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