Reassuring news on the home mortgage front: the tide of mortgage delinquencies will start to recede in 2010—unless you live in Arizona, California, Florida, New York or Virginia. Those states will see delinquencies continue to climb next year.
That’s the forecast from TransUnion, the big credit rating company, based on an analysis of credit trends over the last few months.
TransUnion isn’t talking about a big turnaround in the national trend in 2010. Just that mortgage delinquencies will peak in 2010 and then decline slightly.
The company projects that delinquencies will grow to 6.59% of all mortgages at the end of 2009 from 6.25% at the end of the third quarter. At 6.25% the third quarter delinquency rate was about three times the historical norm.
In 2010 the delinquency rate will fall to 6.39%, TransUnion projects.
Good news I guess. The 2010 rate will be higher than the third quarter 2009 rate that was already three times the normal historical level. But it will be down 0.2 percentage points from the end of 2009 peak.
Let’s hope the drop means that delinquencies will continue to fall and that they don’t get stuck at an elevated level after 2010.
The picture won’t be uniform, of course. TransUnion projects that 22 states will see a double-digit decrease in mortgage delinquencies in 2010. The biggest decreases will come in North Dakota (a 17.9% drop), Minnesota (a 15% drop) and Oklahoma (a 14.4% drop).
Five states, however, will actually see an increase in mortgage delinquencies in 2010: Â Florida (17.3% increase), Arizona (6.3% increase), California (0.9% increase), New York (0.4% increase) and Virginia (0.4% increase).
By the end of 2010 TransUnion projects that Florida will have the highest mortgage delinquency rate at 16.9%, almost three times the national average, followed closely by Nevada at 16.1%.
Jim could you kindly comment on BAC and other bank preferred shares with 8% interest as a place to park cash instead of bank accounts apying 0.25%?….safe?
In the business in Fl. In my opinion the “good that is coming from all this is that the RE prices are still falling and as the prices fall the mortgage amounts are slowly matching the property values…and the new mortgages are sustainable. Public hanky panky is evident still as it is easier to not pay existing mortgage and claim bankruptcy as credit for some is stinky anyway. Should eventually even out. The new law to slap bank’s hands for dragging feet on addressing short sales and foreclosures doesn’t seem to affect the banks much. Some bank’s still can not afford to strike too many assetts (even bad) from their books at once hench the long process of clearing out bad RE assets. This has helped to even out the price drop but have lost some properties to negligence. Still a mess. But further along to recovery.
If I’m remembering this properly, in general the “unless you live in states” of Arizona, California, Florida, etc. are the ones that had the biggest real estate bubbles and crashes; therefore, the ones with the most mortgages that are underwater; and the ones with the highest unemployment rates. A pretty nasty mixture. The states mentioned that have been projected to have the greatest decreases in delinquencies are the ones in the midwest that have the best employment pictures.
interesting numbers. I think Transunion has them way to high. A large percentage of late mortages get worked out. It is a lot easier to deal with late payments than forclosurs.
This is hard for me to swallow given that the economy continues to shed jobs, there will be a big rise in rate resets for Alt-A and option ARM mortgages in 2010 and 2011 (see http://www.calculatedriskblog.com/2007/10/imf-mortgage-reset-chart.html), and house prices have not recovered.
Are mortgage rate resets essentially meaningless because of the low interest rate environment?
One thing that worries me is the certainty of those numbers. Not only that the report is certain about the general trend, it also gives 3-digit precision, which is ridiculous by itself. (Jim, I am talking about TransUnion report, not yours!)
Is that percentage going to go down because homeowners are getting back on their feet and paying, or because banks are foreclosing and therefore the mortgage is no longer delinquent (but the home not necessarily being paid for)? If the latter, it’s still not a good thing, is it?