Fewer mortgages going bad but foreclosures expected to increase
The Mortgage Bankers Assn. says it could take three or four years to return to a normal pattern of delinquencies and foreclosures.
Fewer home loans are in trouble these days, but despite some improvements, the nation is not even halfway through cleaning up the foreclosure mess, industry experts said.
It could take three or four years to return to a typical pattern of delinquencies and foreclosures, the Mortgage Bankers Assn. said in releasing its quarterly delinquency report Thursday.
An economist for the trade group declined to estimate how many households had lost their homes since the mortgage meltdown four years ago, or how many more foreclosures were to come.
But the Center for Responsible Lending, a nonpartisan advocacy group that accurately predicted a foreclosure tidal wave in 2006, issued its own assessment Thursday: 2.7 million American households had lost their homes as of February, with an even greater number to come.
The advocacy group, which analyzed 27 million home loans made from 2004 through 2008, estimated that an additional 3.6 million mortgages were in foreclosure or likely to fail.
"That means the nation is not yet midway through a foreclosure crisis that mires the economy," the Durham, N.C., group said in releasing its study.
The mortgage industry stopped funding high-interest subprime mortgages and other risky loans in 2007, when the meltdown made it impossible to sell them. But the backlog of soured mortgages from that era was enormous and has been compounded by lingering unemployment of about 9% nationally and about 12% in California.
Things are slowly improving, said Mike Fratantoni, the mortgage bankers' economist. The number of borrowers who had missed at least one payment but were not yet in foreclosure dropped below 8% for the first time since the fourth quarter of 2008. Just a year ago, it was 9.13%.
The percentage of home loans mired in the foreclosure process was up slightly from a year earlier at 4.43%, compared with the 1% that once had been considered normal, Fratantoni said.
The backlog remains high in part because lenders eased up on foreclosures for much of 2011 after revelations that they had mishandled legal paperwork and procedures when repossessing homes in the past.
The regulatory pressures on home lenders include a lengthy investigation by a task force of state and federal officials. California Atty. Gen. Kamala D. Harris is also pursuing a separate probe in hopes of forcing more write-downs of principal for troubled California borrowers.
Longtime industry observer Guy Cecala, publisher of Inside Mortgage Finance, said he believes it will take at least two more years to resolve the crisis.
No comments:
Post a Comment