Hosing, I Mean Housing... Well this isn't getting any better... from the wire:
*(US) Q4 MORTGAGE DELINQUENCIES: 9.47% V 9.64% PRIOR; first decline in 8 quarters
Yeah, but....
- Mortgages in foreclosure at 4.58% v 4.47% q/q
Oops. Wrong way there.
- percentage of loans on which foreclosure actions were started at 1.20% v 1.42% q/q
A loan on which the bank refuses to foreclose gathers no loss.
- Prime mortgage delinquency rate 7.01% v 6.26% q/q
But it's still delinquent, and getting more delinquent. This jump, by the way, now pegs the prime delinquency rate at some seven times normal.
Were those loans really prime? I think not.
- Mortgage Bankers Association: 15% of US mortgages were in foreclosure or delinquency (remains a record); with loans 90 days past due also a record
Oh that's nice.
70% of homes have a mortgage on them (the other 30% are "paid off.") This implies that approximately 10.5% of all all homes are delinquent or in foreclosure.
One in ten.
No, the housing mess is not over.
We keep hearing about how we need to practice "principal forbearance."
But that's what a short sale or deed-in-lieu (which then results in a sale to someone else) is - it is recognition of the loss, with the loss absorbed as it should be by both the lender (who loses money) and the borrower (who has his or her credit trashed.)
All the clamoring for "principal reduction" is an attempt to once again get someone off the hook - but nobody should get off the hook. What should happen is that the auditors, bank regulators and examiners should go into these institutions and demand that any loan 60+ be marked to the current appraised value of the property less 10% for rehabilitation and sales expense.
That would give the banks and MBS-holders a powerful incentive to negotiate immediate short sales or deed-in-lieus, as doing so would relieve them of the 10% additional penalty in rehab and sales expenses. That is, obstructionism of the market clearing mechanism of any sort would cost them money, instead of what happens now - they obstruct because it allows them to continue to lie about their balance sheets, asset quality and financial strength!
This is just another piece of "The Bezzle" in our financial markets and the financial side of our economy, and if we are to recover economically we must put a stop to it.
We've tried it the bank's way for three years. It has failed. It is time to tell the banks to cut the crap and either clear these homes or the examiners and regulators will simply mark the paper to the market less resale expenses and be done with it.
