One in Seven Mortgages Are Non-Performing or in Default
As of 10/29/2010 an incredible one in seven or 14% of the nearly 54 million first liens in the country are now either delinquent or in default. (Source)
The problem is that most houses currently in default become foreclosures later. (The depressing statistics of “failure to cure” are discussed below.) So what? It could get worse–much worse:
- Given the huge number of houses in default now, a flood of foreclosures is clearly on the way.
- The expected flood of foreclosures in the near future could further depress prices of home.
- Lower home prices will put even more home owners “under water” (owning more on their mortgage than the home is worth if sold)
- Being “under water” could lead to even more home owners to stop making payments, and so on . . .
Want to see how many homes are in default or foreclosure in your neighborhood? Use Google’s foreclosure maps to expose the extent of defaults and foreclosures nationwide and in your neighborhood. (Source)
- Foreclosures: Chicago’s South West Side, 60629 (Source)
The red dots represent properties in that zip code that are either in pre-foreclosure (missed one or more payments), or are in foreclosure, or are already bank owned. They are each individual tragedies. (Source)
Take another look at this map for a moment. Consider the words of Fr. Stan Rataj, Pastor of St. Nicholas of Tolentine Parish, located in the center of this Chicago community: “If several hundred families lost their homes to a fire or a tornado, we would rush to help them. This tragedy is just as serious, yet people feel that they have to face it by themselves”. (Source)
Slow Foreclosure Process
Banks are working through their huge backlog of houses in default and foreclosing on them–although it is a slow process. The WSJ says it takes 492 Days From Default to Foreclosure. Why?
Because there is a massive and growing backlog of latent foreclosures. Millions of owners have simply stopped paying their mortgages, and the banks are doing nothing about it, letting the owner live in the house for free.
- If a bank forecloses and takes possession of a house, that means the bank is responsible for property taxes and maintenance. Banks don’t like those costs.
- If a bank then sells the foreclosure at current prices, the bank has to admit a loss on the loan. Banks like that cost even less.
So there is a tsunami of foreclosures on the way that the banks are ignoring, for now.
Those foreclosures will wash over the landscape, decimating prices. (Source)
Most Houses in Default Now Become Foreclosures Later
As you can see from the graph below most non-performing mortgages will not “cure” their delinquent payments (pay their missed payments) and, so, they will then go on from default to foreclosure. One in seven are in default now. This means we can expect a flood of millions of foreclosures in the near future.
(Source, click Source to see an enlarged chart)
Here’s the “non-performing loan counts” data spreadsheet: ( Source, click Source to see an enlarged chart)
( Source, click Source to see an enlarged chart)
One in Seven U.S. Housing Units Vacant
November 14, 2009 by prof77
Approximately 85.5 percent of the housing units in the United States in the third quarter 2009 were occupied and 14.5 percent were vacant. (Source: 2009 US Census report)
Oversupply and Under-demand:
This year has registered the highest reading since the government began collecting such data in 1965.
Part of the glut comes from foreclosures, the rest comes from apartments left empty as the kids move back in with Mom and Dad.
1 in 7 Americans rely on food stamps
A cashier in Massachusetts swipes a food stamp debit card provided by the Supplemental Nutrition Assistance Program.
By Aaron Smith, staff writerDecember 21, 2010: 8:38 AM ET
NEW YORK (CNNMoney.com) — The use of food stamps has increased dramatically in the U.S., as the federal government ramps up basic assistance to meet the demands of an increasingly desperate population.
The number of food stamp recipients increased 16% over last year. This means that 14% of the population is now living on food stamps. That’s about 43 million people, or about one out of every seven Americans.
In some states, like Tennessee, Mississippi, New Mexico and Oregon, one in five people are receiving food stamps. Washington, D.C. leads the nation, with 21.5% of the population on food stamps.
“The high unemployment rate caused the high participation rate,” said Dottie Rosenbaum from the Center for Budget and Policy Priorities, a think tank.
- Number of the Week: 492 Days From Default to Foreclosure (blogs.wsj.com)
- More Foreclosures Expected in 2011 (online.wsj.com)
- Obama resists halt to foreclosures (politico.com)
- Nicolas Retsinas: The Foreclosure Pileup: More Bad News for the US Economy (huffingtonpost.com)
- MAP OF THE DAY: Over Half Of America’s Foreclosures Are Occurring In These 5 States