Record high delinquencies and foreclosures
This past quarter has been a record breaking time in American history as the Mortgage Bankers Association reports that 9.64% of residential loans are delinquent (meaning at least one payment is past due but does not include homes in the foreclosure process), breaking the record set last quarter as the highest delinquency rate since recording began 37 years ago.
Add to that the recent Lender Processing Services report that 3.12% of all homes in America are in the foreclosure process, you have 12.76% of all homeowners in hot water.
Mortgage Broker Justin McHood of VanDyk Mortgage said, “mortgage guidelines are going to continue to get tighter through 2010 (many lenders have recently moved to a 640 FICO score) but even though there is talk of a FHA bailout, there is the possibility that any number of things could happen to the FHA guidelines as the “smart guys” at FHA try to figure out what to do about it. It is my opinion that 2010 is going to be the year of “balancing”: meaning — if you are underwater on your house and you owe more than it is worth — 2010 is going to be the year that you either short-sell your house or buckle-down for the long term.”