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Mortgage Delinquency in another All-Time High

There is good news and bad news in the mortgage industry. The good news is that the rate at which homeowners lag behind on their mortgage has slowed down for the third consecutive quarter. The bad news is, the delinquency rate has hit another record high overall.

For the third month ending September 30, it is estimated that 6.25 percent of mortgage loans within the United States were 60 days or more past the due date. Based on the TransUnion finding, the figure is up 58 percent from 3.96 percent just last year. This figure is quite alarming because being overdue for 2 moths is usually the initial step towards foreclosure since the amount of money necessary to keep up is beyond the capability of most families to save.

The increase from the second to the third quarter wasn’t as high as the 11.3 percent rise during the first to the second quarter though. In addition, it is a lot lower than the 14 percent leap in the quarter before that. The slowing rate of delinquency is seen as a positive sign. However, the fact that there are still too many foreclosures out there shows that the industry is still problematic. According to F.J. Guarrera, the TransUnion VP for financial services, the firm doesn’t expect the figure to improve until the middle part of 2010.

It is also important to note that certain areas are hit harder compared to others. For example, Nevada has the highest rate of delinquency at 14.5 percent which is up from 7.7 percent last year. Another struggling area is Florida with a delinquency rate of 13.3 percent.

There are two factors that need to be resolved before mortgage delinquency rates goes down to a manageable level: unemployment and home values. Unless these two crucial aspects are improved upon, delinquency rates will take longer to resolve.

Foreclosure Stories: Weekly Round-Up

Foreclosure is an intimate concern among families. It affects their lifestyle, standard of living, and their future. It is no wonder that when people hear about foreclosure stories, they cannot help but emphasize with the evicted homeowners. There are even cases when viewers are outraged in the circumstances surrounding the eviction. Whatever the case, it is clear that foreclosure has become a big problem in American society.

In addition, aside from being a personal problem, foreclosure is also a social problem. For instance, areas that have a high foreclosure rate tend to experience a more drastic decline in home prices compared to other areas. Unoccupied homes also become a target among the homeless seeking some shelter. It destroys communities as well as the relationship among neighbors as people put their guards up. Some interesting news, stories, and developments about foreclosure are below:

Bill Shrink Guy @ Shrinkage is Good uploaded a compilation of disturbing news in his post, “10 Outrageous Foreclosure Stories.” Among the stories he compiled include one about a home that was foreclosed about the couple was scammed by Bernie Madoff. The house was turned into a party pad by a Wells-Fargo executive. There was also a story about how one woman committed suicide while another poisoned the kids.

Katie Lopez @ Valley Central posted an article titled “McAllen Seeing Increase in Foreclosures”. The revelations outlined in the article are not at all surprising. With the economic crisis still not completely resolved, more people are losing their homes. It also featured several stories about real homeowners who faced foreclosure.

If you are looking for some inspiring stories, then the blog Man vs. Debt might be the right one for you now. Adam posted an article, “How I Paid Off $15,000 in 9 Months by Selling My Stuff on Ebay”. Although the article is not exactly related to foreclosure, it might as well be. After all, the amount he raised is enough to pay off the mortgage and head off foreclosure for many households.

Home Buyer Credit: Is It Going to Last?

First time home buyers is inevitably anxious right now, especially if they’re not sure they will be able to find their dream home next month. On November 30, the credit is to be finished although the Obama administration is looking into extending it past the due date in order to make it available to more home buyers.

The situation about the $8,000 first-time home buyer credit is very fluid right now. According to Housing Secretary Shaun Donovan and Treasury Secretary Tim Geithner, the government may extend it for a “limited period”. However, several proposals are being considered. There are very generous and least generous proposals that are being looked into.

Jaret Seiberg from the Concept Capital’s Research Group said that, “there is bipartisan compromise to extend the credit through spring and expand it to existing homeowners who are stepping up to a different home”. Because of this, policymakers are considering giving up to $6,500 in credit for homeowners who want to trade up their homes, as long as they live in their current residence for at least five years.

Not everyone can take advantage of the first-time home buyer credit though. This is because in order to get the full amount, the applicant should have less than $125,000 in adjusted gross income ($225,000 for married couples). Aside from this, the provision is only applicable for homes that are sold for $800,000 or less. The contract should be signed by April 30, 2010 and must be closed by June 30 of the same year to qualify for the home buyer credit.

The home buyer credit has attracted supporters and critics alike. Supporters say that it has helped boost home sales at a time when it is needed most. Extending it will further improve sales and help stabilize prices. However, critics say that while it has helped in some ways, it is ill-targeted and therefore not cost-effective. They say that only 10 to 20 percent of 2 million qualified home buyers bought homes with the credit in mind.  In other words, 80 to 90 percent would have bought anyway even without the credit.

Home Prices are About to Get Much Worse – Fiserv

People hoped that the worst is over. But recent research reveals that it is just about to get worse. Home prices are about to plunge into new lows next year. According to a forecast on real estate price, home values will drop in 342 out of the 381 markets. Fiserv, a financial analysis firm, forecasts that median home prices will lower by 11.3 percent by June 30, 2010 nationwide. By 2011, the organization sees some stabilization in the market with prices rising by 3.6 percent.

Previously, Fiserv has projected the decline in home-sale prices even while overvalued houses are being taken up by enthusiastic buyers. However, even the firm has underestimated the scope of the crisis. Moody’s chief economist Mark Zandi agrees with the Fiserv’s findings. “I think more price declines are coming because the foreclosure crisis is not over.”

It is expected that areas with high levels of foreclosures will have the steepest declines. For instance, Miami is expected to be the biggest loser with prices projected to plunge by 29.9 percent by the June of next year. Home prices there have already fallen by a massive 48 percent in the last three years. If this projection is correct, the median home prices in the area will fall to $142,000 by June 2011.

Another big loser because of the crisis is Orlando, Florida. It is the second to the worst performer and Fiserv projects that prices will decline by 27 percent by June 2010. Then there will be a less severe price drop in 2011. Meanwhile, in Hanford in California, prices are expected to drop by 26.9 percent and this will continue to fall through the following year. Naples, Florida expects a fall of 26.8 percent but it will flatten out during in the following year.

Not all research firms think that prices will drop further though. Filserv’s findings are at odds with the report from S&P/Case-Shiller Home Price Index. It said house prices have already stabilized.

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