May U.S. Foreclosure Stats from RealtyTrac:
In May, 92,746 homes were in foreclosure, up 2% from April, and 28% higher than the foreclosure activity in May 2005.
Five states represented 48% of all foreclosures in the country. Those five states represent 31% of the nation’s total households.
For the sixth consecutive month, Texas had the highest foreclosure total (15.6% of total).
Florida was the second highest contributor of foreclosures in the country in May (9.6%), while California (9.4%), Illinois(6.9%) and Georgia (6.2%) rounded out the top five.
The Herald Tribune reported back in January Clock is running down on ‘cheap’ mortgages.
Starting in 2006 and accelerating into 2007, as much as $2.5 trillion worth of the fancy mortgages called "hybrids" are coming to the end of the free-lunch part of the deal.
Economists are still trying to put numbers on this reset factor, particularly when it comes to the riskiest home loans, referred to as "sub-prime."
"We don’t have enough data to know how big a problem this will be," said David Berson, chief economist at Fannie Mae, the nation’s largest mortgage packager.
Making matters worse, it is the the sub-prime lenders issuing the most adjustable-rate mortgages. With those who participate in the survey, 80 percent of their loans were ARMs compared to 55 percent in the broader market.
Surprisingly, there is little data that is publicly available on that subject. The best resource is a study conducted in the spring [Spring 2005] by Fannie Mae, a federally chartered corporation that buys mortgages after lenders have issued them. Fannie Mae looked at 2002-2004 loan data to determine what portion of the existing loan pool would be "adjusted," and when.
Fewer than 10 percent of the conventional conforming loans will reset in 2006-2007, but nearly two-thirds of sub-prime loans will. That is because a large portion of the sub-prime loans are two-year adjustables, says Berson, the Fannie Mae chief economist.
The rising foreclosure rate no doubt reflects some of those rate resets but it is going to become progressively worse as the year progresses. Also consider the fact that home prices are now starting to fall. Foreclosure that were avoidable in rising markets by selling one’s home can not be avoided as soon as someone is underwater.
Chron.Com is reporting Foreclosure troubles ahead.
The average rate on a 30-year, fixed-rate loan in May was 6.60 percent compared with 5.63 percent on a one-year ARM, according to Freddie Mac. In 2003, rates on a 30-year fixed were at 6.54 percent, while ARMs carried a 3.76 percent rate.
This year, more than $300 billion worth of hybrid ARMs will readjust for the first time. That number will jump to approximately $1 trillion in 2007, according to the bankers association. Monthly payments will leap too, many beyond what homeowners can afford.
The average rate on a 30-year, fixed-rate loan in May was 6.60 percent compared with 5.63 percent on a one-year ARM, according to Freddie Mac. In 2003, rates on a 30-year fixed were at 6.54 percent, while ARMs carried a 3.76 percent rate.
This year, more than $300 billion worth of hybrid ARMs will readjust for the first time. That number will jump to approximately $1 trillion in 2007, according to the bankers association. Monthly payments will leap too, many beyond what homeowners can afford.
Last year, foreclosures hit a historical low nationwide at about 50,000. But that number has more than doubled since then, according to Foreclosure.com.
And delinquency rates appear to be rising as well. While delinquency rates fell for most types of loans from the fourth quarter of 2005 because of a stronger economy, delinquencies for both prime and subprime ARM loans increased year-over-year in the first quarter, according to statistics from the Mortgage Bankers Association.
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Wednesday’s bond market has opened fairly strong, continuing yesterday’s afternoon rally. The stock markets are showing small gains with the Dow up 12 points while the Nasdaq has gained 6 points. The bond market is currently up 14/32, which should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point.
