By Tim H. Davis,Oct. 1, 2009
The Federal Reserve Bank of Boston recently reported that from Q2 2008 to Q2 2009, 60-day delinquency rates in Massachusetts jumped from just over one percent to 2.5 percent for prime, fixed-rate mortgages, and from four percent to over six percent for prime, adjustable-rate mortgages.
During the same period, delinquency rates increased from eight percent to 18 percent for sub-prime, fixed rate mortgages and from 13 percent to 25 percent for sub-prime, adjustable rate mortgages.
Through foreclosures and refinancing, the number of outstanding sub-prime loans has declined. As a result, adjustable rate, sub-prime loans made up only 21 percent of foreclosed loans during Q2 2009. The number of prime, fixed-rate loan foreclosures surpassed that of adjustable rate sub-prime loans in Q4 2008, and now make up 42 percent of foreclosures.
Foreclosures of prime-rate loans are closely linked to the combination of unemployment and declining home values. With unemployment still high (9.1 percent for Massachusetts in August, 2009); stabilizing home prices are the only hope for a reduction in the number of foreclosures. The complete Boston Fed report includes charts illustrating how Massachusetts is doing compared to New England and the U.S.
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By Tim Davis, July 30, 2009
Each quarter, Foreclosure Monitorhas provided delinquency data on two risky loans types, known as sub-prime and Alt-A. While this detailed data is still included below, it must be noted that the number of these outstanding loans has fallen as homes are sold or foreclosed and as homeowners refinance their mortgages. In addition, homeowners with conventional prime mortgages are facing financial distress, increasing the incidence of foreclosure among these loan types.
The Federal Reserve Bank of Boston recently reported that from Q1 2008 to Q1 2009, 60-day delinquency rates jumped from one percent to two percent for prime, fixed-rate mortgages, and from three percent to six percent for prime, adjustable-rate mortgages.
During the same period, delinquency rates increased from eight percent to 17 percent for sub-prime, fixed rate mortgages and from 14 percent to 24 percent for sub-prime, adjustable rate mortgages.
Even though the delinquency rate for prime, fixed rate loans remains relatively low, this is the most popular mortgage product, and as this chart from the Federal Reserve reveals, prime mortgages have overcome sub-prime, adjustable rate mortgages as the greatest source of foreclosures. This is indicative of the fact that with continued home price declines and increasing levels of unemployment, foreclosures are less about a loan type and more about overall economic distress.
Alt-A and Sub-Prime Delinquency rates
Massachusetts continues to rank in the middle of all states in the proportion of homes with risky sub-prime and Alt-A mortgages, but delinquency rates of these loans are higher than other states. In the Federal Reserve Bank of New York's most recent analysis of First American Loan Performance data, this pattern has held true since the Monitor first reported the data from July 2008.
From January to May 2009, the number of outstanding Alt-A loans declined 25 percent and the number of sub-prime loans declined 13 percent. While a portion of the decline can be attributed to foreclosed loans, such a drop is only possible if some of these homeowners refinanced. Even with this decline, 85,000 Massachusetts homeowners still hold one of these two loan types.
The bad news is that of the loans that remain, delinquency rates continue to climb. In January 2009, 7.1 percent of Alt-A loans and 18.8 percent of sub-prime loans were at least 90 days late. This increased to 7.7 percent and 20.1 percent, respectively, in May 2009. While Massachusetts improved from the fifth worst in Alt-A 90-day delinquencies in January to eighth in May, Massachusetts continues to have the highest 90-day delinquency rate for sub-prime loans.
The percent of outstanding owner-occupant Alt-A and sub-prime loans in foreclosure increased 54 percent and 23 percent, respectively, from January to May, indicating that these loans remain a problem.
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Alt-A, sub-prime late rates continue climb
By Tim Davis, May 8, 2009
As reported in the last Foreclosure Monitor, Massachusetts ranks in the middle of all states in the proportion of homes with risky sub-prime and Alt-A mortgages, but delinquency rates of these loans are higher than other states. In the Federal Reserve Bank of New York's most recent analysis of First American Loan Performance data, this pattern held from October 2008 to January 2009.
During this period the number of outstanding Alt-A loans declined 2.7 percent and the number of sub-prime loans declined 5.1 percent. This is to be expected as homeowners refinance or homes are foreclosed.
The bad news is that delinquency rates continue to climb. In July 2008, 4.8 percent of Alt-A loans and 13.7 percent of sub-prime loans were at least 90 days late. This increased to 7.1 percent and 18.8 percent, respectively, in January 2009. While Massachusetts improved from the third worst in Alt-A 90-day delinquencies in October to fifth in January, Massachusetts continues to have the highest 90-day delinquency rate for sub-prime loans.
Although the percent of outstanding owner-occupant Alt-A and sub-prime loans increased from October to January, for sub-prime loans, this was a small 0.1 percent, and Massachusetts performance compared to other states has improved, improving one position in the rankings for both Alt-A and sub-prime foreclosures.