Today’s news seems to bring us a tale of opposites every time they report on the real estate market as it exists at this point in time. For example, an article by the AP just the other day said “the pace at which people fell behind on their mortgages slowed during the summer for the third quarter in a row. The bad news is the overall delinquency rate hit another record.”
I don’t know about you but a guy could go goofy if he just took what he read at face value. On the other hand, if a guy looked at these reports and decided to sift out the silver lining he could get by although be it at a slower pace.
TransUnion Adds To The Clutter
TransUnion plucked some numbers out of their database (total of 27 million consumer records per them) and said that mortgage delinquencies remain highest in the four states where the crisis has hit the worst:
- In Nevada, the rate reached 14.5 percent, up from 7.7 percent a year ago.
- In Florida, the rate was 13.3 percent, up from 7.8 percent last year.
- In Arizona, the rate hit 10.4 percent, up from 5.5 percent in 2008.
- In California, the rate jumped to 10.2 percent, from 5.8 percent last year.
TransUnion added the opinion they expect delinquencies to rise. Of the 50 States, they expect Nevada to reach 16 percent. Since I live in Nevada, I can fish for the silver lining to my heart’s content if TU is correct.
By the way, TransUnion also stated that the states with the highest delinquency and foreclosure rates will likely continue to see depressed housing prices. That sounds obvious but yet needs to be stated especially if fishing for the silver lining is your current means of finding real estate values.
Because TransUnion has a basket full of numbers, they also proffered that for the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due. According to them, that’s up 58 percent, from 3.96 percent, a year ago. Being two months behind is considered a first step toward foreclosure, because it’s so hard to catch up with payments at that point.
If that is anywhere near true, the silver lining becomes easier to find. I don’t know what that silver lining is for you in your market, but it could be a variation of the loan called a bridge loan. In this case, instead of the usual meaning of bridge loan, you make the delinquent party a loan for their two months mortgage payments. For collateral, use your imagination. Personally I wouldn’t make it the house. I’d use another object. But that’s me.
Another Time Frame
The government tells us we are climbing out of the mess. However, number crunchers like TransUnion tell us they don’t expect the figure (late payers) to start declining until the middle of 2010. Who to believe, right?
That is a good question but we do know two things must get better before mortgage delinquency rates start reversing themselves. We need the unemployment picture to improve, i.e. more of us go back to work. We also need home values to improve.
This may sound like a tall order given both are more macro than micro. On the other hand, if more of us started looking for the silver lining and get busy with our piece, maybe, just maybe, we can use the micro to manage the macro.