The rate of defaulting owners is INCREASING….
No surprised when you consider:
Supporting Resources/Links TransUnion Trend Data Interactive U.S. Map
SOURCE: TransUnion
* 4,000,000 have already lost their homes to foreclosure
** 6,000,000 are in default. Headed to become tomorrow’s foreclosure (unless they make the smart move to short sale)
*** 11,000,000 owners are considered ‘underwater’. The average
underwater owes $50,000 more on their homes than current market value.
**** The actual number of underwater owners is actually closer to
20,000,000 when those who are ‘near underwater’ are factored in. For
example, someone owes $300,000 on a house that is worth $300,000. Any
downward market fluctuation they are underwater. If they have to sell
assuming market commissions, normal selling fees etc they are
underwater.
What is happening to drive up the delinquency rate?
Strategic default. Owners are making the financial decision to
deleverage themselves out of a sinking asset. Many owners have been
waiting to see if the market would improve or if there would be any sort
of meaningful underwater owner bailout out program. Now that they know
neither will happen millions are strategically defaulting..or at least
considering it.
Agents, help those owners transition from their underwater home by doing a short sale vs a foreclosure.
Source: Transunion Press Release.
The national mortgage delinquency rate (the rate of borrowers 60 or
more days past due) increased for only the second time since the end of
2009, edging upward to 6.01% at the end of the fourth quarter in 2011.
This information is reported by TransUnion and is part of its ongoing
series of quarterly analyses of credit-active U.S. consumers and how
they are managing credit related to mortgages, credit cards and auto
loans.
Between the third and fourth quarters of 2011, all but 13 states
experienced increases in their mortgage delinquency rates. On a more
granular level, 64% of metropolitan areas saw increases in their
mortgage delinquency rates in Q4 2011. This is the same percentage as
found in Q3 2011, but up from Q2 2011 when only 21% of MSAs experienced
an increase.
“To see that, quarter over quarter, fewer homeowners were able to
make their mortgage payments is not welcome news,” said Tim Martin,
group vice president of U.S. Housing in TransUnion’s financial services
business unit. “However, it was not unexpected. First, there tends to be
a natural seasonality, evident well before the recession, of higher
delinquencies in the fourth quarter; perhaps explained by borrowers
balancing holiday spending vs. debt payments. Secondly, on the economic
front, house prices continued to deteriorate in the fourth quarter and
unemployment remained stubbornly high. This combination leads to more
negative equity in homes and reduced real personal income that can
affect borrowers’ ability and willingness to pay their mortgages.
“The more encouraging news is that, when looking year over year, more
homeowners are making their mortgage payments and the delinquency rate
dropped over 6% since Q4 2010. While it is certainly good to see the
rate dropping, at this pace it will take a very long time for mortgage
delinquencies to get back to normal.”
Many see the economic environment beginning to brighten, although
modestly. Therefore, TransUnion’s forecast predicts mortgage borrower
delinquency rates to drift downward marginally in 2012, but in the
meantime we may still see a quarter or two of slightly elevated
nonpayment rates as some consumers are not able to, or decide not to,
repay their mortgage debt obligations in light of the uncertain economic
outlook.
TransUnion’s forecast is based on various economic assumptions, such
as gross state product, consumer sentiment, unemployment rates, real
personal income, and real estate values. The forecast would change if
there are unanticipated shocks to the economy affecting recovery in the
housing market or if home prices fall more than expected.
Q4 2011 Mortgage Statistics — Delinquency Rates
Quarter over Quarter Q3 2011 Q4 2011 Pct. Change
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USA 5.88% 6.01% 2.21%
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Year over year Q4 2010 Q4 2011 Pct. Change
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USA 6.41% 6.01% (6.24%)
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Highest Mortgage Delinquency States Q4 2011
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Florida 14.27%
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Nevada 12.08%
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New Jersey 8.32%
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Arizona 7.50%
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Lowest Mortgage Delinquency States Q4 2011
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North Dakota 1.50%
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South Dakota 2.45%
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Nebraska 2.57%
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Alaska 2.77%
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Top 3 Year-over-Year
Increases Q4 2010 Q4 2011 Pct. Change
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New Jersey 7.43% 8.32% 11.98%
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Vermont 3.06% 3.40% 11.11%
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South Dakota 2.22% 2.45% 10.36%
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Top 3 Year-over-Year
Declines Q4 2010 Q4 2011 Pct. Change
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Arizona 9.70% 7.50% (22.68%)
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California 9.14% 7.14% (21.88%)
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Wyoming 3.42% 2.79% (18.42%)
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Q4 2011 Mortgage Statistics — Mortgage Debt Per Borrower
Quarter over Quarter Q3 2011 Q4 2011 Pct. Change
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USA $190,382 $188,194 (1.15%)
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Year over Year Q4 2010 Q4 2011 Pct. Change
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USA $189,046 $188,194 (0.45%)
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Highest Mortgage Debt States Q4 2011
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District of Columbia $375,563
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California $332,021
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Hawaii $311,099
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Maryland $249,148
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Lowest Mortgage Debt States Q4 2011
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West Virginia $100,982
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Mississippi $107,755
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Oklahoma $111,869
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Arkansas $114,345
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Top 3 Year-over-Year
Increases Q4 2010 Q4 2011 Pct. Change
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South Dakota $130,309 $135,999 4.37%
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North Dakota $114,557 $118,147 3.13%
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Iowa $120,371 $123,488 2.59%
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Top 3 Year-over-Year
Declines Q4 2010 Q4 2011 Pct. Change
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Nevada $228,990 $219,095 (4.32%)
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Arizona $202,976 $197,319 (2.79%)
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California $339,088 $332,021 (2.08%)
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Supporting Resources/Links TransUnion Trend Data Interactive U.S. Map
TransUnion 2Q11 Mortgage Statistics TransUnion Payment Hierarchy Study TransUnion Deleveraging Analysis TransUnion on Twitter
TransUnion’s Trend Data database TransUnion’s Trend Data is a
one-of-a-kind database consisting of 27 million anonymous consumer
records randomly sampled every quarter from TransUnion’s national
consumer credit database. Each record contains more than 200 credit
variables that illustrate consumer credit usage and performance. Since
1992, TransUnion has been aggregating this information at the county,
Metropolitan Statistical Area (MSA), state and national levels. For the
purpose of this analysis, the term “credit card” refers to those issued
by banks.
SOURCE: TransUnion
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