MBA Foreclosure

May 20th, 2008 | Tags: Foreclosure

The latest MBA (Mortgage Bankers Association) foreclosure survey has presented a gloomy picture. The writing has been on the wall from the second quarter of 2007 – when the foreclosure numbers started going from bad to worse.

According to a survey a seasonally adjusted number of loans (0.65%) on one to four unit properties entered foreclosure. This is the highest in a history of 55 years. In the first quarter the first record was hit with 0.58%. A year ago it was 0.43%.

This survey of delinquencies takes into its gambit 44 million mortgages – over 286,000 loans that had gone into foreclosure during this quarter. The lead was taken by California, Florida, Nevada and Arizona, said Dough Duncan of MBA in a news talk. He said “were it not for the increases in foreclosure starts in those four states, we would have seen a nationwide drop in the rate of foreclosure filings.” 34 states showed decreases in the rates of new foreclosed units. In other states the increase had been modest. But these four rogue states have upset the balance and pulling down the national figures.

Duncan further clarified that there was a clear-cut difference in performance between conventional and sub-prime loan performances. The seriously delinquent rate of the loans that were fixed remained unchanged from the first quarter to the second. The rate fell in the case of sub-prime fixed rate loans. But it increased for the ARMs. It is not clear whether the sub-prime ARM’s are the root cause of all the trouble in the four foreclosure intense states. There is a possibility that local real estate market conditions are causing prices to tumble. This is making it difficult for borrowers either to refinance or sell their houses.

California has contracted 17% of the total number of sub-prime ARM’s . Over 19% of the foreclosures start from the sub-prime ARMs. The four states together account for one third of the nation’s sub-prime ARM loans. In all the four states the price of properties has tumbled. Of the 59 metropolitan areas in these four states 52 witnessed the fall of prices during the second quarter according to the Office of the Federal Housing Enterprise Oversight. These regions have also seen a high number of investors taking loans. The number of non-owner occupied loans has considerably increased in all the four states.

It should however be kept in mind that happenings in California, Florida, Nevada and Arizona affects the national numbers but not the national performance.