Mortgage Market Post-Recession

Mortgage Market Post-Recession

While the US is trying to make its way out of the recession, it is a bitter truth that there is still much woe where mortgages are concerned. However, there is some glimmering hope as there are signs visible that the real estate markets are working their way towards stabilization.

One such visible sign of this rebound can be obtained from a report issued by the Mortgage Bankers Association that shows a decline in the mortgage defaults for first residential mortgages in the last quarter of 2009. A survey conducted by the same association also found that late repayments for these loans had fallen to 9.47% of all loans taken for mortgages from October to December 2009. This figure is also lesser than that recorded in the 3rd quarter of 2009. However, this figure remains above the 7.88% figure in the last quarter of 2008. While the decline from the 3rd to 4th quarter may be small, the sign is still positive as it reflects a decrease in the loan numbers which could lead to foreclosure. It is known that the occurrence of late payments began in mid 2006 with the numbers increasing in 2007. A surge in sub-prime defaults caused late-payment rates to increase beyond imagination.



With the number of troubled loans decreasing, experts expect the number of serious delinquent loans and foreclosures to eventually reduce. This increases confidence that the problem is not bad as people think of it to be.



In the whole of the US, mortgages which were in some stage of foreclosure stood at a figure of 4.58% at the end of last year. This was an increase from the 4.47% recorded in September. Florida ranks first in the list of states with mortgages in foreclosure stage. Subprime mortgages have also increased from 15.35% in September to 15.58% at the end of 2009 across the US. Nonetheless, there were signs of recovery in the last quarter. Loan numbers which were in foreclosure dropped to 1.20% from 1.42% in September 2009. Subprime foreclosures also decreased to 3.66% from 3.76%.



The Home Affordable Modification Program introduced by Obama’s administration was designed to help prevent mortgages from reaching foreclosure. This scheme could have contributed to the reduction in last quarter foreclosure actions. However, this program is showing mixed results. With only 1 million home owners under the program, only 116300 were reported to have received modified loans permanently. About 62,000 owners have dropped out of the program for reasons such as failure to make payments even after they had been reduced. The small reach of this program may cause foreclosures to increase even more with unemployment rates on the high. So, it may take longer for the program to cause a widespread positive impact on the foreclosure rates and mortgage defaults.

Related Posts

Hedging – A Valued Tool for Risk Management in the... One of most valued tools in the futures markets is hedging which is commonly used and is still used by the traders of Futures today. Hedging is whe...
Real Estate Investments: Way to Earn Money Real estate investments are costlier compared to other investment strategies such as stocks or bonds. There are several real estate organizations whic...
Choosing the Best Broker Choosing stock brokers can irritate the problem. Although they all seem, there are differences in commission rates, you have to know. Depending on...
Different Options For Loan Modifications The various types of loan modifications are as follows: Step Rate Modification Under this plan of loan modification a wrongful interest is being...
Ways To Earn A Passive Income There are various ways how one can earn passive incomes. Some of them are listed below: 1. Affiliate Programs – One can earn passive income by crea...