I know, we’re only supposed to talk about green shoots and recovery, but I can’t help but wonder why Mortgage delinquencies hit another record in 3Q.
The pace at which people fell behind on their mortgages slowed during the summer for the third consecutive quarter, but the overall delinquency rate hit another record, a new report shows.
For the three months ended Sept. 30, 6.25 percent of U.S. mortgage loans were 60 or more days past due, according to credit reporting agency TransUnion. That’s up 58 percent from 3.96 percent a year ago.
Being two months behind is considered a first step toward foreclosure, because it’s so hard to catch up with payments at that point.
The rate was up 7.6 percent from the second quarter. That’s a much smaller jump than the 11.3 percent rise in the second quarter from the first, and the 14 percent leap seen in the quarter before that.
While the slowing growth rate is a positive sign, the increase shows there’s still a lot of problematic mortgages out there, said F.J. Guarrera, vice president of TransUnion’s financial services division. The company doesn’t expect the figure to start declining until the middle of 2010.
The middle of 2010? These guys are dreaming. I may be wrong, but it seems to me that with job losses mounting, wages deflating, and consumer credit going down the toilet, we’ll have no such ‘slowing’ in the delinquency rates.
We have yet to see Alt-A resets hit, plus we’ve got a whole new boatload of sub-prime, Zero-down loans just dispatched by the FHA.
Real estate delinquencies, along with consumer credit delinquencies, will continue to mount for a while, perhaps several more years.
There is no recovery. In fact, this isn’t even a recession. For those who haven’t guessed yet, we are in the midst of a Great Depression.
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Mac, the denial and lies will continue until cash flow becomes a problem. How long do you think that will take?Â
Hard to say Melanie. It seems to me that they are playing some high level accounting games here and the banks will either continue to hide the toxic assets off the books, or transfer them to The Fed.
At some point, the chickens will come home to roost. If I was a betting man, I’d say within 2-3 years. I am on the road so i can’t get to the estimated delinquency/foreclosure chart for the next few years, but we have another pop in defaults coming very soon, and this is in residential mortgages — not even counting CRE.
For the banks, if we keep bailing them out, they seem to have unlimited cash flow.
For the US government/Fed, cash flow may be a whole different story, since the Fed prints all they want and the US govt borrows like crazy. I suppose once the US govt can’t service the debt any longer, then the real cash flow problems will be realized.
The ‘collapse’, at least to me, seems like it will continue to accelerate over several years, as opposed to everything coming down in a week or two.
Right-on Melanie and Mac. Â Not sure if you have a subscription to The August Forecast (http://www.augustforecast.com/), but it’s a good value IMO. Â I also highly recommend that everyone sign up for a free subscription to the August Review (http://www.augustreview.com/). Â Good discussion about CFR, TC, globalism, etc.
Check the link below for a great image from Patrick Wood’s most recent Market Update from The August Forecase site (image courtesy of Agora Financial).
I think this image pretty succinctly sums up where we are and where we are headed.
http://www.augustforecast.com/wp-content/uploads/wavetwo.gif
Patrick, the community appoints you official shtfplan.com fact checker 🙂
Thanks for that mortgage reset chart!
Based on that chart, it looks like we face about as big a hit in Wave 2 as we did in Wave 1. What makes it worse, is that I think this second round is going to affect mortgages with much higher values than those of sub-prime.
Thank you, Patrick. I will check out those sites.
Mac, I read somewhere that the 1st wave was $1 trillion, and the 2nd wave is $1.5 trillion. Add to that the fact that the 2nd wave borrowers were riskier and had less “skin” in the game + your point that the values were higher, and I think the 2nd kaboom will be much, much worse than the 1st.
Sorry, the above comment was from me.  I forgot to put my name in.Â