More Homeowners Falling Behind on Payments
Lisa Lisa
Fewer Catching Up on Lapsed Mortgages
By JAMES R. HAGERTY
Homeowners who fall behind on their mortgage payments have become much
less likely to catch up again, a new study shows.
The report from Fitch Ratings Ltd., a credit-rating firm, focuses on a
plunge in the "cure rate" for mortgages that were packaged into
securities. The study excludes loans guaranteed by government-backed
agencies as well as those that weren't bundled into securities. The
cure rate is the portion of delinquent loans that return to current
payment status each month.
Fitch found that the cure rate for prime loans dropped to 6.6% as of
July from an average of 45% for the years 2000 through 2006. For so-
called Alt-A loans -- a category between prime and subprime that
typically involves borrowers who don't fully document their income or
assets -- the cure rate has fallen to 4.3% from 30.2%. In the subprime
category, the rate has declined to 5.3% from 19.4%.
"The cure rates have really collapsed," said Roelof Slump, a managing
director at Fitch.
Because borrowers are less willing or able to catch up on payments,
foreclosures are likely to remain a big problem. Barclays Capital
projects the number of foreclosed homes for sale will peak at 1.15
million in mid-2010, up from an estimated 688,000 as of July 1.
Cure rates have sunk despite the Obama administration's prodding of
banks to ease terms for millions of borrowers to try to prevent
foreclosures. Without those loan-modification efforts, cure rates
would be even lower.
Job losses have left some borrowers unable to make payments. In
addition, Mr. Slump said, some who could continue to make payments
probably are no longer willing to. That may be because the values of
their homes have fallen below their loan balances and they see little
hope of ever recovering their investments.
What's more, because of widespread backlogs and delays in the
foreclosure process, people who quit paying may be able to stay in
their homes for more than a year before being evicted.
The Fitch study covers about $1.7 trillion of mortgages held in
securities, representing about 16% of U.S. mortgages outstanding.
Write to James R. Hagerty at bob.h...@wsj.com
Printed in The Wall Street Journal, page A2
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Phlip
> banks to ease terms for millions of borrowers to try to prevent
> foreclosures. Without those loan-modification efforts, cure rates
> would be even lower.
Have any banks done what he said to? or does he need to do more?
> Job losses have left some borrowers unable to make payments. In
> addition, Mr. Slump said, some who could continue to make payments
> probably are no longer willing to. That may be because the values of
> their homes have fallen below their loan balances and they see little
> hope of ever recovering their investments.
Would signing up with a re-fi broker like PennyMac help? How do they
work, and do they show up in any of these national surveys?
Pers3id
58925b...@v15g2000prn.googlegroups.com:
>> Cure rates have sunk despite the Obama administration's prodding of
>> banks to ease terms for millions of borrowers to try to prevent
>> foreclosures. Without those loan-modification efforts, cure rates
>> would be even lower.
>
> Have any banks done what he said to? or does he need to do more?
No Doubtful Obama can do much to fix this.
>
>> Job losses have left some borrowers unable to make payments. In
>> addition, Mr. Slump said, some who could continue to make payments
>> probably are no longer willing to. That may be because the values of
>> their homes have fallen below their loan balances and they see little
>> hope of ever recovering their investments.
>
> Would signing up with a re-fi broker like PennyMac help? How do they
> work, and do they show up in any of these national surveys?
No. Debt needs to default to cure what ails us (more debt-
based money in the system than sustainable by underlying
fundamentals). The Fed is trying to hide the losses and reinflate
the bubble. The Fed is part of the problem, not the solution.
--
Build a banker a fire and keep him warm for the night. Set a
banker on fire and keep him warm for the rest of his life (and
he keeps you warm too).