BiggerPockets

The first quarter of this year has seen records being broken as regards foreclosure related troubles. It indicates that the crisis continues to rage and the end is not in sight.

Over 10% of the residential home owners had failed to make a minimum of one payment towards mortgage during the first quarter observed the Mortgage Bankers Association on Wednesday 19th May. In the last quarter of 2009 the proportion was 9.5% and in the first three months of 2009 it was 9.1%.

The figures have taken into account seasonal factors. For instance heating and holiday expenses increase mortgage delinquencies during the festive season towards the end of each year. By spring many catch up on the gap and become current again. Thus from winter till spring the delinquencies increase.

Over 4.6% of the residential house owners were facing foreclosures. This too is a record. If seasonal factors are not taken into account it is a modest rise from the close of the previous year.

The European debt problem has caused stocks to fall last Wednesday. The increasing number of mortgage defaults was also focused on. The industrial average of Dow Jones fell by over 160 points during early hours of trading.

The chief economist of the Mortgage Bankers Association Jay Brinkman said that the housing crisis seems to have stabilized. The seasonal adjustments could be exaggerated from the quarter prior to the first quarter of this year. He reiterated that he did not observe any signs of things getting any worse but he felt it would take some time for things to improve. That it had not got worse continued to be bad news.

During the third quarter there were about 4.3 million citizens who were defaulting by a minimum of three months or were already in foreclosure said Brinkman.

Hardly any dent has been made by the $75 billion programme named HAMP initiated by the Obama team in 2009 March. Over 299,000 borrowers had their loans modified permanently till last April. It calculated to 1.2 million since the time of the start of the programme. Nearly 277,000 borrowers calculating to 23% of the applicants have failed to pass through the trial period during the previous three months.

This year the foreclosure troubles are mainly caused by unemployment or underemployment. Initially the culprit had been unregulated lending by the banks. But today even those with prime loans with fixed rates are now stumbling and joining the foreclosure group.