Foreclosure Activity Keeps Delinquency Growth in Check
Servicers have picked up the pace as they work through a backlog of home loans that have languished in late-stage delinquency status for months, and in some cases well over a year.
Liquidation activity has accelerated, and as a result, Lender Processing Services (LPS) says lenders’ foreclosure inventories – which the company defines as loans that have been referred to a foreclosure attorney but have not yet reached the final stage of foreclosure sale – have risen “dramatically.”
A logical side effect is that increases in delinquency numbers have remained subdued as loans are pushed out the end of the pipeline faster than new delinquencies
enter. For agency portfolios, i.e. Fannie Mae and Freddie Mac, LPS says the result has been a “rapid decline” in mortgages classified as delinquent.
Both GSEs have reported a steady fall-off in their seriously delinquent loans (90 or more days past due) since early this year. Fannie Mae’s serious delinquency rate has dropped from 5.59 percent in February to 4.70 percent as of the end of August. Freddie Mac’s rate fell from 4.20 percent to 3.83 percent during that same time period. Freddie says it slipped further to 3.82 percent in October.
Looking at the industry’s overall delinquencies, LPS reports that as of the end of October, 9.29 percent of the nation’s outstanding mortgages were at least 30 days past due but not yet in foreclosure. That’s nearly 5 million loans, with 2.2 million in the 90-day-plus bucket.
The 9.29 delinquency rate was flat compared to the previous month, and down 8.4 percent from a year earlier, according to LPS’ analysis.
Another 2 million loans were in the process of foreclosure at October month-end, resulting in a foreclosure inventory rate of 3.92 percent. That’s up 2.1 percent from the previous month and 5.2 percent from October 2009.
Even with subdued growth in the delinquency rate, LPS says delinquencies remain about 2.7 times above the historical average. Foreclosure inventories are 7.4 times higher, and rising.
NEW YORK – The pace of the U.S. economic recovery will remain steady but slow in the face of persistently high unemployment and heavy debt burdens, according to a new survey.
The National Association for Business Economics survey, set to be released Monday, found economists now expect growth of 2.7 percent this year, up slightly from the previous forecast of 2.6 percent.
For 2011, the group still expects an economic expansion of 2.6 percent.
The likelihood of either stagflation or relapse into recession was seen as low. But high unemployment, debt and severe loss of wealth are expected to hamper a more robust rebound, according to the survey
"Confidence in the expansion's durability is intact, but panelists remain concerned about high levels of federal debt, a continuing high level of unemployment, increased business regulation, and rising commodity prices," said Richard Wobbekind, president of NABE and an associate dean of the Leeds School of Business at the University of Colorado. "
The 51 members surveyed by the group said they also expect consumer spending to remain modest, with this year's holiday retail sales expected to rise just 2.5 percent from last year.
Meanwhile, the number of jobs employers add to their payrolls is forecast to average less than 150,000 a month before picking up in the latter half of next year. The unemployment rate is expected to remain elevated at 9.5 percent or higher through early next year. It's expected to ease only slightly to 9.2 percent by the end of 2011.
That would mark the weakest post-recession job recovery on record, the group said.
The outlook on housing also remained tepid, with the group scaling back its expectations for housing starts this year to 720,000, from its forecast of 750,000 last month.
The bright spot in the survey was business spending, with sustained, double-digit growth projected through the end of next year. Spending on structures is now expected to grow 1.8 percent in 2011. That's still weak, but better than the previous forecast of 0.2 percent contraction.
NABE panelists also said they expect the federal funds rate to remain near zero until late next year. The 10-year Treasury note is now expected to yield 3.25 percent by the end of 2011, compared with the 3.75 percent forecast last month.
The survey was taken between Oc.t 21 and Nov. 4.