How Much Longer?
Excerpted from this AP article:
LOS ANGELES — U.S. homeowners are getting better about keeping up with their mortgage payments, driving the percentage of borrowers who have fallen behind to a three-year low, according to a new report.
Some 5.49 percent of the nation’s mortgage holders were behind on their payments by 60 days or more in the April-to-June period, the agency said. That’s the lowest level since the first quarter of 2009.
Home prices need to recover further for the delinquency rate to decline.
Foreclosure hotbeds Arizona and California each saw marked improvement during the second quarter. California’s mortgage delinquency rate fell nearly 22 percent to 6.13 percent from a year earlier, while Arizona’s declined 21 percent to 6.14.
TransUnion’s research is culled from its database of 27 million anonymous consumer records.
Let’s do the math to examine the gap between 60-day-or-more delinquencies and defaulters in SD, and try to estimate how much longer this environment will last.
According to city-data.com, there are 362,087 homes with mortgages in San Diego County. Using the California ratio of 6.13%, there should be around 22,195 homes that are more than 60 days late on their mortgage payments.
How many are in default currently in SD County?
NOD = 5,097
NOTS = 6,036
Total = 11,113
Only half of the delinquents have been served their notice. With servicers now claiming to process loan-mods within 30 days, if you are more than 60 days late, aren’t you already on your way out?
Foreclosed in 2012 = 4,000/7.5 months = 533 per month (July had 482 foreclosures)
Short sales closed in 2012 = 4,962 = 662 per month (In July we closed 712 short sales)
The combined foreclosure/short-sale machine is clearing roughly 1,200 properties per month, which means that we have about 9-10 months’ worth of known defaulters to clear out. But we can estimate that are another 11,000 roughly who are more than 60 days late, and with the California Homeowners Bill of Rights expected to stall the machine further, I think it is safe to say that we have a minimum 2-3 years left of this madness. It wouldn’t surprise me if it ends up 5-10 years either!