Rising Delinquencies Means More Repossessed Homes

More and more American homeowners are defaulting on their monthly mortgage payments but are not yet on foreclosure proceedings. About 1 million borrowers made up the backlog of delinquent loans making the prospect of recovery from repossessed homes impossible to attain.

According to industry experts, the growing number of delinquent borrowers threatens to further push down home prices and hides the extent and depth of the foreclosure crisis. On the part of lenders, the rising number of delinquent borrowers could mean more financial losses to them.

IHS Global Insight economist Patrick Newport said that the delinquency trend could only mean repossessed homes rate will keep on rising. Some economists said that the increasing mortgage delinquencies is at the root of the economic crisis, adding that an economic recovery is not achievable if the housing market will not recover first and home prices remain unstable.

They also pointed out that delayed foreclosures could be a blessing to others but to some troubled homeowners, it only prolong their financial distress and delay their prospect of moving away from their repossessed homes.

According to Inside Mortgage Finance data, seriously delinquent homeowners who were not yet on foreclosure proceedings increased by 3.04 percent or $227 billion total loans during the first three months of this year. Compared the previous years, seriously delinquent loans totaled $97 billion during the same period. In 2007, the rate of seriously delinquent loans was lower than 1 percent during the same period.

On the other hand, some mortgage payment backlogs reflect the inability of lending institutions to keep pace with the increasing volume of delinquent properties.

According to housing industry consultant Howard Glaser, lenders are experiencing a hard time handling the volume of delinquent properties. He added that lenders are torn between short sales, loan modification and foreclosures.

However, some of the mortgage delinquency backlogs reflect the slow pace of foreclosures as the industry and the federal government intensified their efforts to help distressed homeowners who want to protect their properties from foreclosures.

On the other hand, the oversupply of foreclosure properties in the country has already pressured home prices to go down drastically. Last May, existing property prices declined by 16.8 percent compared with the previous year figures.

Zetabid Chairman Bob Bellack predicted that the increasing number of delinquent properties not yet on foreclosure will push the repossessed homes rate to surge in the second half of this year.

Comments are closed.

Sponsored Links:

Related Posts:

• Unemployment, ARMs to Increase Manatee Repossessed Homes
• Foreclosures Bank Owned Risks Decline in the U.S.
• Bank and Government Foreclosures Prevention Efforts
• Bank Repo Homes Growth Slows, Default Rates Remain High
• Repossessed Houses Rising due to Higher Loan Payments