3Q09 - Delinquencies up, rate slows
According to credit reporting agency TransUnion, delinquent mortgages were up 58% from 3.96% a year ago, and as of Sept. 30, 6.25% of U.S. mortgage loans were 60 or more days past due.
Two months delinquency is considered a first step toward foreclosure because it's hard for homeowners to catch up with payments at that point.
The rate of delinquency is slowing, however. (Funny how deliquencies are up 58%, but in the same article they say they are slowing...HMM could it be that it is the end of the year and they will just roll the stats into next year?) The rate was up 7.6% from the second quarter -- a much smaller jump than the 11.3% rise in the second quarter and a 14% rise seen in the quarter before that.
F.J. Guarrera, vice president of TransUnion's financial services division, says that while the slower rate is encouraging, the continual increase shows there are still a lot of problematic mortgages out there.
Mortgage delinquencies remain highest in the four states where the crisis has hit the worst: in Nevada, the rate reached 14.5%, up from 7.7% a year ago; in Florida, the rate was 13.3%, up from 7.8% last year; in Arizona, the rate hit 10.4%, up from 5.5% in 2008; and in California, the rate jumped to 10.2%, from 5.8% last year.
(I wonder what Stetaes I am going to focus on in the Future...http://mortgage-portal.biz/_renovation/ Wow the majic 8 ball says we are already there!
Two things have to get better before mortgage delinquency rates start reversing themselves: home values and unemployment. "Until we see improvement in both of those areas, it's possible that it will take longer for delinquency to improve," Guarrera said.
Here Come the Holidays...Another Reason to Rejoice!
It's that time of year when families gather together for a good old fashioned feast, hours of football games and parades plus plenty of healthy debate. Whether you adore all your in-laws or can barely tolerate the thought of listening to stale jokes for one more year, chances are the holidays will still make any REO investor rejoice due to timing. Yes - timing.
It's a not exactly a trade secret but the holidays present the perfect opportunity for REO investors.
First, few buyers are making active offers during the holidays...and those numbers drop to near zero on Thanksgiving and Christmas Day.
However, research shows those same days are actually the best time to make an offer on a home. It seems most sellers are in a good mood and more generous so willing to accept a lower than anticipated offer.
Of course, it doesn't hurt that home prices tend to drop to a twelve month low each December and sellers are very serious about selling - or at least getting a good offer- before the end of the year. People have a mindset that wants closure by the end of the year so having a signed contract on hand provides the peace of mind the need and want to get on with the rest of their life.
To shy or busy to drum up business on an actual holiday?
Try the first Tuesday of the beginning of the month. Not only has the bank made yet another mortgage payment but they didn't receive an offer from anyone that happened to view the home over the prior weekend. Likewise, if you miss house-hunting during December, wait until early January to present really lowball offers; banks, brokers and sellers alike know few people want to trudge through rain, sleet and snow while looking at homes plus the first of the credit card balances are beginning to come due after the big holidays.
Think of it as one more way to motivate sellers and bankers to accept an offer without the need to beg borrow or plead. Instead, point out the obvious to them - the bills are piling up, fewer homes tend to sell and it could be a long, cold and hard winter if they opt to wait it out rather than accept your bid.
Finally, one last word of advice when presenting a holiday offer for a REO home; use a bid that ends in a zero such as $75,000 rather than a precise number such as $75,497. Research shows people perceive precise numbers as lower and amounts ending in 000's as higher. The reality may be quite the opposite but like the old adage - perception is everything.