Mortgage delinquencies still rising

By | August 21, 2009

Where does your state rank?The number of Americans who have fallen at least 30 days behind on their home loan payments jumped 44% in the second quarter from a year ago, according to an industry report.That puts delinquencies at a record 9.24% of mortgages, according to the National Delinquency Report from the Mortgage Bankers Association MBA. That represents more than 4 million of the 45 million borrowers covered by the report.What the rate does not include, however, are loans already in foreclosure. Some 4.3% of all the mortgages are in that stage, up from 3.85% three months earlier and 1.55 percentage points from one year ago.The combined percentage of loans past due and those already in foreclosure hit 13.16% during the quarter, the highest ever recorded by the MBA survey”There was a major drop in foreclosures on subprime ARM loans,” said Jay Brinkmann, chief economist for the MBA, in a prepared statement. “The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase.”Indeed, the MBA survey reported that prime, fixed-rate mortgages accounted for nearly one in every three foreclosure starts. That’s way up from a year ago, when only one of every five foreclosure start involved a prime loan.That bodes ill for the future health of the mortgage market. Prime loans make up two-thirds of the mortgage market, and if delinquencies among these mortgages continue to proliferate, the number of foreclosures will soar.

– via CNN

After having an attorney review my loan docs this morning, I’m certain now that the only thing Bank of America can take is my home, even though it is worth $130,000 less than my loan.  My lawyer determined that, as long as I don’t damage the place on the way out, I am not open to a deficiency judgment on either the 1st or 2nd loan because mine was a purchase money obligation for a bona fide residential purchase.  He  saw no point in trying to negotiate to get the bank to report “paid as agreed” to my creditors when the short sale closes, because he says the bank won’t do that. At least he’d never heard of it.  I may get a second opinion on that one.

Short sale vs foreclosure?

See this. Your credit will be in the toilet whether you have a short sale or a foreclosure. There really is no credit benefit to a short sale. A real benefit of a short sale, however, is that you can buy a new home three years sooner. The waiting period before you can buy again with a foreclosure is 5 to 7 years. With a short sale it is only 2 years. If you’ve had no late payments (rare), you can buy another place right away, according to this article. A short sale also benefits your Real Estate agent. Foreclosure benefits include not having to show your home and keep it clean and the possibility of Cash for Keys from the bank at the end of the ordeal.

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