Mortgage Delinquency Rate Tops 9%

[wwswimming]

Link to the image

http://www.investorsinsight.com/cfs..._frontline/jm121909image003_5F00_3AC527F8.jpg

basically the rate hovers between 3 1/2 to 1 1/2 % from 1991 to sometime 2007, then heads for the moon.

from John Mauldin's email -
"Residential delinquencies are up 1.2% just in the last quarter, and now stand at a stunning 9%."

never seen anything like it.

 

[postmortemIA]

And banks are still profitable ... we're footing the bill.

 

[Craig234]

Link to the image

http://www.investorsinsight.com/cfs..._frontline/jm121909image003_5F00_3AC527F8.jpg

basically the rate hovers between 3 1/2 to 1 1/2 % from 1991 to sometime 2007, then heads for the moon.

from John Mauldin's email -
"Residential delinquencies are up 1.2% just in the last quarter, and now stand at a stunning 9%."

never seen anything like it.

And yet the real lessons are so hard to get the public to learn, even while their country is taken under their noses. At what point do we recognize our democracy's not working right, that the founding fathers' protection of an independant media, for example, turning into media that serve basically only two agendas, profit (fluff) and corporatist ideology (dollars) has left us without that informed populace?

There are people who hugely profited and continue to proft from the schemes ebhind the housing bubble. We're not publicizing them enough, not taking corrective measures enough.

The huge story of the re-alignment of wealth in the nation that's the bigger story than the details of the foreclosure explosion, but behind it, is little known.

You hear the same things from the same people who are not learning the lessons - 'more tax cuts', 'cut spending', 'support the troops', 'Washington is corrupt', nothing different seeing the crash.

Has the public adopted any relevant agenda, are they demanding their politicians take action - 'fix the corrupt money in elections', 'ban the government-special intrerest revolving door', 'break up the big media monopoly', fix the systemic corruption in the financial regulation system'? No, you rarely hear people raising the demands listed there which would actually do some good.

I put pointers to good info in my sig in the hopes to help get people looking at useful info, but haven't heard from pretty much anyone that they have checked any of the sources out. And that's among the politically interested who are here, not the apathetic public at large. The situation is a poblem, with the democracy not working as intended where the public should be making the demands above. Our country has suffered problems like this before, but there's no excuse for it today.

The road to the continued increased concentration of wealth, to the US becoming more like countries with the few too rcich and the many too poor, there's a lot of crashing yet to come for most Americans.

With the corproate dominance increasing, the comparisons to China grow closer, in constrast to where our nation supports a strong middle class, our government represents 'the public'.

Is our nation about 'the public' or is it about, like China, the public being analogous to farm animals, who generae the wealth for the farm owners? I'd liike to see it about the public.

 

[techie81]

FYI: Its going up more next year. Many who have not foreclosed yet will be doing so in the next 6 months.

 

[bobsmith1492]

FYI: Its going up more next year. Many who have not foreclosed yet will be doing so in the next 6 months.

Isn't this the delinquency rate? Doesn't that mean people who are late but NOT been forclosed? So if foreclosure continues, the delinquency rate should go down as they lose their houses. But I doubt it will go down; the banks have no need for more foreclosed houses and more and more people will probably become delinquent, particularly as country is still losing jobs, they realize they may be bailed out, and that foreclosure will not come immediately.

 

[nergee]

And banks are still profitable ... we're footing the bill.

That's because loan loss allowances are at purposely kept at low levels. If they were where they should be, bank earnings would be greatly reduced....They do this because they can....Do we even live in reality anymore?

 

[her209]

That's because loan loss allowances are at purposely kept at low levels. If they were where they should be, bank earnings would be greatly reduced....They do this because they can....Do we even live in reality anymore?

You have to wonder how many of these banks are profitable because of the new accounting mark-to-market rule changes.

 

[Slew Foot]

I heard a while ago that FHA loans were delinquent at twice the rate as regular loans. More tax dollars up in the air.

 

[werepossum]

I heard a while ago that FHA loans were delinquent at twice the rate as regular loans. More tax dollars up in the air.

This is because as a GSE Fannie Mae, under its mandate from HUD, has to buy nearly half its loans from those qualifying for low to moderate income buyers who in many areas cannot afford a house. To meet that demand, mortgage companies and banks began depending on many crooked practices such as short interest only loans with balloon payments, second mortgages as part of the purchasing price, and adjustable mortgages set artificially low to allow the buy to purchase a house he manifestly cannot afford. Therefore Fannie Mae has to buy loans that are going to fail no matter how good the economy as well as loans that fail because the borrower loses his job and can't find another.

 

[StageLeft]

LOL @ graph, are you sure it's real? I imagine it is.

 

[MikeMike]

So glad my parents mortgage is <500 a month.

 

[StageLeft]

So glad my parents mortgage is <500 a month.

But what do they make? Sub $500 isn't very good if you're running the line at McDonalds.

 

[IronWing]

This is because as a GSE Fannie Mae, under its mandate from HUD, has to buy nearly half its loans from those qualifying for low to moderate income buyers who in many areas cannot afford a house. To meet that demand, mortgage companies and banks began depending on many crooked practices such as short interest only loans with balloon payments, second mortgages as part of the purchasing price, and adjustable mortgages set artificially low to allow the buy to purchase a house he manifestly cannot afford. Therefore Fannie Mae has to buy loans that are going to fail no matter how good the economy as well as loans that fail because the borrower loses his job and can't find another.

Please provide a link to the text of any law or regulation requiring a bank or any other lender to make a mortgage loan to an unqualified applicant. The entire text all U.S. Statutes and the Code of Federal Regulations is available online so no blog links, no commentary links, strictly links to the law or regs please. Thank you.

To help you out here is the web address for the CFRs:
http://www.gpoaccess.gov/CFR/

and here is the web address for the U.S. Statutes:
http://www.gpoaccess.gov/uscode/

 

[OCGuy]

So much misinformation in this thread. Stick to what you know.

 

[werepossum]

Please provide a link to the text of any law or regulation requiring a bank or any other lender to make a mortgage loan to an unqualified applicant. The entire text all U.S. Statutes and the Code of Federal Regulations is available online so no blog links, no commentary links, strictly links to the law or regs please. Thank you.

To help you out here is the web address for the CFRs:
http://www.gpoaccess.gov/CFR/

and here is the web address for the U.S. Statutes:
http://www.gpoaccess.gov/uscode/

My point was not that there is a law saying a lender must make a mortgage loan to an unqualified applicant; even Democrats aren't stupid enough to write a law saying that outright. My point was that when HUD requires almost half of Fannie Mae's loans to be to disadvantaged borrowers, what results is the mortgage crash as lenders rush to fill this new market. (You might have gotten a clue from the relative default rates, but apparently not.) Also, since Fannie Mae and Freddie Mac had unrealistic goals mandated, they could not pick and choose loans to back, but had to purchase whatever loans were available meeting the HUD mandate. That led to a great deal of fraud and questionable practices as lenders quickly learned nothing fitting the HUD criteria would be too closely examined.

I'm willing to assume that you are not so stupid as to believe that no bad things can come of laws unless those laws specifically mandate those bad things - in other words, that there are no unintended consequences because our lawmakers are created as perfect, all-knowing beings. If I'm being too generous, just let me know.

 

[IronWing]

My point was not that there is a law saying a lender must make a mortgage loan to an unqualified applicant;
<gibberish deleted>

Thank you. Maybe next time you won't try to repeat and spread nonsense.

If HUD was enforcing some secret code outside the written laws and regs and lenders lost money as a result of this, you would see a host of suits in federal court seeking relief from HUD's actions. Lenders aren't doing this because there were no such actions. Instead of running to the courts, the logical place to seek relief from agencies that overstep their legal authority, the lenders have headed to the press and to the web to spread nonsense that would never pass muster in court. They are attempting to blame the government for their own actions.

 

[Zebo]

You have not seen anything yet. By 2010 it will be closer to 20&#37; as alt-A and option adjustables come on-line - you think you're house value sucks now - you have also seen nothing yet.

 

[IronWing]

That's an interesting graph. I'm surprised that prime, non-agency backed mortgages make up such a small portion of the ARM market. Maybe prime folks went for fixed rate loans more often?

 

[werepossum]

Thank you. Maybe next time you won't try to repeat and spread nonsense.

If HUD was enforcing some secret code outside the written laws and regs and lenders lost money as a result of this, you would see a host of suits in federal court seeking relief from HUD's actions. Lenders aren't doing this because there were no such actions. Instead of running to the courts, the logical place to seek relief from agencies that overstep their legal authority, the lenders have headed to the press and to the web to spread nonsense that would never pass muster in court. They are attempting to blame the government for their own actions.

Wow. I'm sorry - you really ARE that stupid, aren't you?

Here's a link to a news story reporting just one of the increases in the HUD mandates for low and moderate income loans: http://www.bizjournals.com/buffalo/stories/2004/11/01/daily11.html
I was wrong on the numbers, though - the mandate was increased to 56% in 2004. You could find this in literally hundreds if not thousands of places. Here's a link to a news story about Fannie Mae's and Freddie Mac's scaling back of their low income "affordable housing" efforts after failing to meet their mandates in 2006 and 2007. http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092301718.html
Note especially Lockhart's comment that 'Fannie Mae and Freddie Mac purchased and guaranteed "many more low-documentation, low-verification and non-standard" mortgages in 2006 and 2007 "than they had in the past."' Sound like, um, exactly what I was saying? In the attempt to meet unrealistic HUD mandates, the GSEs could not turn down anything that superficially met the mandate - and they still repeatedly failed to meet it even so.

I am literally amazed that someone posting in P&N could be so utterly ignorant of something so thoroughly reported and discussed for the last thirty years, beginning with Carter's initial push to change the mandate of Fannie Mae and Freddie Mac from middle class loans to lower class loans, through the big jump in percentages under Clinton and the big jump under Bush II.

Secret codes! You guys are hilarious!

 

[fskimospy]

Wow. I'm sorry - you really ARE that stupid, aren't you?

Here's a link to a news story reporting just one of the increases in the HUD mandates for low and moderate income loans: http://www.bizjournals.com/buffalo/stories/2004/11/01/daily11.html
I was wrong on the numbers, though - the mandate was increased to 56% in 2004. You could find this in literally hundreds if not thousands of places. Here's a link to a news story about Fannie Mae's and Freddie Mac's scaling back of their low income "affordable housing" efforts after failing to meet their mandates in 2006 and 2007. http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092301718.html
Note especially Lockhart's comment that 'Fannie Mae and Freddie Mac purchased and guaranteed "many more low-documentation, low-verification and non-standard" mortgages in 2006 and 2007 "than they had in the past."' Sound like, um, exactly what I was saying? In the attempt to meet unrealistic HUD mandates, the GSEs could not turn down anything that superficially met the mandate - and they still repeatedly failed to meet it even so.

I am literally amazed that someone posting in P&N could be so utterly ignorant of something so thoroughly reported and discussed for the last thirty years, beginning with Carter's initial push to change the mandate of Fannie Mae and Freddie Mac from middle class loans to lower class loans, through the big jump in percentages under Clinton and the big jump under Bush II.

Secret codes! You guys are hilarious!

http://www.mcclatchydc.com/251/story/53802.html

 

[IronWing]

Wow. I'm sorry - you really ARE that stupid, aren't you?

Here's a link to a news story reporting just one of the increases in the HUD mandates for low and moderate income loans: http://www.bizjournals.com/buffalo/stories/2004/11/01/daily11.html
I was wrong on the numbers, though - the mandate was increased to 56% in 2004. You could find this in literally hundreds if not thousands of places. Here's a link to a news story about Fannie Mae's and Freddie Mac's scaling back of their low income "affordable housing" efforts after failing to meet their mandates in 2006 and 2007. http://www.washingtonpost.com/wp-dyn/content/article/2008/09/23/AR2008092301718.html
Note especially Lockhart's comment that 'Fannie Mae and Freddie Mac purchased and guaranteed "many more low-documentation, low-verification and non-standard" mortgages in 2006 and 2007 "than they had in the past."' Sound like, um, exactly what I was saying? In the attempt to meet unrealistic HUD mandates, the GSEs could not turn down anything that superficially met the mandate - and they still repeatedly failed to meet it even so.

I am literally amazed that someone posting in P&N could be so utterly ignorant of something so thoroughly reported and discussed for the last thirty years, beginning with Carter's initial push to change the mandate of Fannie Mae and Freddie Mac from middle class loans to lower class loans, through the big jump in percentages under Clinton and the big jump under Bush II.

Secret codes! You guys are hilarious!

Again with the FUD. All you have to do is post a link to the law or reg or to a court smackdown of HUD for exceeding it's authority in forcing a lender to make a loan to an unqualified applicant. Otherwise you are blowing smoke. Private lenders set their own criteria for approving loans. They choose to do business with Fannie or Freddie or not. There is no requirement to sell a loan to Fannie or Freddie.

It is really quite simple. Private lenders chose to make unwise loans. They did so in the belief that housing prices would always go up and they couldn't lose. Freddie and Fannie, like other investors, also got greedy and bought loans they shouldn't have.

Some folks are simply incapable of accepting that private businesses can screw up and therefore try to blame government when the bottom falls out.

 

[Zebo]

With government back stop it amounts to the same thing. It's the same for student loans - any bank will lend you them no matter what because they have government backing.

PS I'm not saying these bankers should not be in prison for their MBS & CDO securitization practices e.g. fraud with their cohorts at rating agencies but to ignore or downplay the Feds role in securitization is dishonest and mainly partisan.

 

[IronWing]

With government back stop it amounts to the same thing. It's the same for student loans - any bank will lend you them no matter what because they have government backing.

PS I'm not saying these bankers should not be in prison for their MBS & CDO securitization practices e.g. fraud with their cohorts at rating agencies but to ignore or downplay the Feds role in securitization is dishonest and mainly partisan.

I agree the feds played a role, a huge role. My point is quite narrow: no lender was forced to make a loan to an unqualified borrower.

 

[LegendKiller]

What exact role did the "feds" play in securitization specifically?

I'd also like to know why MBS is suddenly horrible, considering it has existed for more than 30 years without a problem. I'd also like to know how the broader aspect of the CRAs were "fraud"?

 

[LegendKiller]

You have not seen anything yet. By 2010 it will be closer to 20% as alt-A and option adjustables come on-line - you think you're house value sucks now - you have also seen nothing yet.

Graph has been refuted time and again. Please get new cud to chew.