BluefoxToday blog : Brighter side of mortgage foreclosure news

Brighter side of mortgage foreclosure news

The recent headlines about the foreclosure stats compiled by the Mortgage Bankers Association, or MBA, informed the world that the amount of loans sliding into trouble is the highest ever for this survey. It was started in 1953, a few moons ago. Numbers like that will make you wonder what will come next. It's particularly hard on those affected by it. Yet, let's take a deeper look at the situation and see what it tells us.

First of all, around a third of homeowners live in houses that are debt-free. Yes, there is no mortgage to burn at the end of the day. That's good news. Among the rest two-thirds who have prime loans merely 2.6% are 30 days or more late nationally. Meaning, 97.4% of the loans granted to borrowers with a top FICO score are current on payments. Still pretty good.

When you look at the subprime segment, the figures are clearly worse. Nationwide 14.5% of homeowners are more than 30 days behind on their mortgage obligations, a substantial hike from the prime sector. Again, if you peer at it from the other angle you'll see that 85.5% are on time. Overall, it hurts, but doesn't seem to be way out of hand. Not yet anyway.

And then you have the fearsome foursome, the four states, Arizona, California, Florida and Nevada, that are comfortably ahead of the pack in delinquent home loans. They were the leaders during the boom years in price appreciation and surprisingly, in a complete reversal, they are now galloping up front with busted loans. Isn't it funny how it works. The MBA's chief economist states that without the soaring foreclosure rates in these four states the national filings would've actually shown a decrease. How about that?

So, just reading a news release on the Internet or in the paper or hearing a TV news program rush through the stats gives you a rather one-sided picture of the whole, I'm afraid.


Provided by: 

Esko Kiuru
Mortgage, real estate and apartment industry analyst - syndicated mortgage, housing and property management blog
My cell: 702-499-1006

Comment balloon 2 commentsEsko Kiuru • September 19 2007 12:04PM


This is not good news for those of us that live in the "Fearsome Four".  It means major market corrections which will ultimately lead to a strong market again.

We need alternative financial products (not mortgage based) to help these clients get out of debt, fix their credit and back into the market!  Unfortunately with declining market conditions many of these buyers will not be helped saved from foreclosure.  There will be no equity to refinance with.  I think that we'll be seeing a vicious cycle for a while anyway.

Posted by Kate Bourland, Onlilne Marketing Mobile Marketing (Marketing with Kate) almost 12 years ago


Our four states are going to feel it for a while, no question.

Posted by Esko Kiuru almost 12 years ago