Posts Tagged ‘cure rates’

Huge Plunge In Mortgage Cure Rates Portends Foreclosure Disaster

Huge Plunge In Mortgage Cure Rates Portends Foreclosure Disaster

foreclosuresCourtesy of Mish

Mortgage cure rates have fallen off a cliff. For those unfamiliar with the term, a "cure rate" pertains to those who go delinquent on loans then catch up and become current. Late payments that don’t "cure" have a tendency to get later and later over time, before they eventually default.

Fitch ratings notes Cure Rates Plunge Among Prime RMBS.

According to Fitch, cure rate on prime mortgages plunged to 6.6% from an average 45% during 2000-2006. Alt-A cure rates plunged to 4.3% from an average 30.2% and subprime cure rates fell to 5.% from an average 19.4%.

A couple of charts can help put this in context. Here is a chart from Hidden Backlog of Foreclosures.

Pent Up Foreclosures By State

click on chart for sharper image

In regards to the above chart I said.

The area in pink represents potential foreclosure demand. Not all of that area will be foreclosed, but some of it sure will. The "Hidden Backlog" mentioned above (and highlighted in red) is within that pink area.

One thing missing from the chart is pent-up demand from those who are not delinquent yet have a huge incentive to walk because of massive negative equity.

For a look at "negative equity", moratoriums, and other foreclosure issues please see Brace for a Wave of Foreclosures, the Dam is About to Break.

With the new data from Fitch let’s take a second look using another chart from Calculated Risk’s post MBA Forecasts Foreclosures to Peak at End of 2010.

Prime Delinquencies and Foreclosures

click on chart for sharper image

In 2006 less than 3% of prime loans were delinquent and nearly half of them cured. Currently close to 6.5% of prime mortgages are delinquent (another 3% are in foreclosure). Worse yet, the cure rate is miserable. Even reworked loans quickly sink back into delinquency.

A key reason for the falling cure rates pertains to underwater mortgages. In 2006, someone might easily have had positive equity in their home and sold it (curing the loan). Most in trouble now do not have positive equity and cannot sell.

Of the 6.5% delinquent, the current cure rate is a mere 6.6%. On this basis, prime foreclosures could spike to 9%. If that sounds


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Cure Rates On Prime Loans Drops Ominously

Cure Rates On Prime Loans Drops Ominously

Courtesy of Tom Lindmark at But Then What

This is a pretty important bit of information from HousingWire.

A slower cure rate among delinquent loans erased improvements in the number of loans rolling into delinquency status among US residential mortgage-backed securities (RMBS), according to Fitch Ratings.

Cure rates decrease as fewer delinquent loans return to current payment status each months. The prime cure rate slipped from an average 45% during ‘00-’06 to 6.6% today. Alt-A cure rates dropped to 4.3% from an average 30.2% and subprime cure rates fell to 5.% from an average 19.4%.

“Recent stability of loans becoming delinquent do not take into account the drastic decrease in delinquency cure rates experienced in the prime sector since the peak of the housing market,” said managing director Roelof Slump in a corporate statement.

“Whereas prime had previously been distinct for its relatively high level of delinquency recoveries,” Slump added, “by this measure prime is no longer significantly outperforming other sectors.”

The article suggests that the decline in cure rates is related to the fact that so many borrowers are underwater. Obviously, that’s a factor but I think that there might be a couple of other reasons.

For one, Fannie and Freddie let their loan standards slip markedly in the time period mentioned in the Fitch study. While they more or less held the line on FICO scores, they continued to underwrite higher and higher LTV loans and their debt service requirements were stretched beyond reason, or at least beyond reason if you factored in anything other than a good economy.

The second factor is the economy. More to the point, I don’t think that the statistics are truly capturing the hit to income that a lot of homeowners are taking. The unemployment rate is the headline number but a toll is being taken on households as salary reductions and enforced furloughs spread through the economy. In many cases, homeowners were operating on too thin a margin for the hit they’re taking and can’t cure their delinquencies by tightening their belts any further. There just isn’t any fat left to cut in a lot of budgets.

Unless the trend in cure rates starts to move the other way, any improvement in overall delinquencies is not going make a meaningful difference. Quite the contrary, we might be looking…
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Zero Hedge

Sweden And Its Welfare State In Crisis

Courtesy of ZeroHedge View original post here.

Authored by Nima Gholam Ali Pour via The Gatestone Institute,

The Swedish welfare state has often been praised by the left in the United States. After the migration crisis of 2015, however, when Sweden was flooded by Syrian refugee claimants, Sweden is now facing a welfare crisis that threatens the entire Swedish welfare state model.

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Phil's Favorites

Silicon Valley's latest fad is dopamine fasting - and that may not be as crazy as it sounds

 

Silicon Valley's latest fad is dopamine fasting – and that may not be as crazy as it sounds

Dopamine fasting, the newest fad to hit Silicon Valley, is being used as a way to get over addictive habits. SewCream/Shutterstock.com

Courtesy of A. Trevor Sutton, Concordia Seminary

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The Technical Traders

The Wuhan Wipeout - Could It Happen?

Courtesy of Technical Traders

News is traveling fast about the Corona Virus that originated in Wuhan, China. Two new confirmed cases in the US, one in Europe and hundreds in China. As we learn more about thispotential pandemic outbreak, we are learning that China did very little to contain this problem from the start. Now, quarantining two cities and trying to control the potential
outbreak, may become a futile effort.

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Kimble Charting Solutions

Bad News For Crude Oil Should Come From This Pattern, Says Joe Friday

Courtesy of Chris Kimble

It’s a good idea for investors to be aware of key indicators and inter-market relationships.

Perhaps it’s watching the US Dollar as an indicator for precious metals or emerging markets. Or watching interest rates for the economy. Experience, history, and relationships matter. And it’s good to simply add these to our tool-kit.

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When crude oil tops or bottoms, it seems that ...



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Insider Scoop

5 Software-Application Stocks Moving In Thursday's After-Market Session

Courtesy of Benzinga

Gainers

Atlassian Corporation, Inc. (NASDAQ:TEAM) stock surged 9.7% to $145.50 during Thursday's after-market session. According to the most recent rating by Morgan Stanley, on January 13, the current rating is at Overweight.

Diebold Nixdorf, Inc. (NYSE:DBD) shares increased by 8.1% to $11.48. The most recent rating by DA Davidson, on December 13, is at Buy, with a price target of $17.00.

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Biotech

Snakes could be the original source of the new coronavirus outbreak in China

Reminder: We are available to chat with Members, comments are found below each post.

 

Snakes could be the original source of the new coronavirus outbreak in China

Chinese cobra (Naja atra) with hood spread. Briston/Wikimedia, CC BY-SA

Haitao Guo, University of Pittsburgh; Guangxiang “George” Luo, Univers...



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Chart School

RTT browsing latest..

Courtesy of Read the Ticker

Please review a collection of WWW browsing results. The information here is delayed by a few months, members get the most recent content.



Date Found: Monday, 16 September 2019, 05:22:48 PM

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Comment: This chart says SP500 should go back to 2016 levels (overshoot will occur of course)



Date Found: Tuesday, 17 September 2019, 01:53:30 AM

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Comment: This would be HUGE...got gold!


...

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Members' Corner

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David Brin shares an excerpt from his new book on the relentless war against democracy and how we can fight back. You can also read the first, second and final chapters of Polemical Judo at David's blog Contrary Brin.

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Lee's Free Thinking

Why Blaming the Repo Market is Like Blaming the Australian Bush Fires

 

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Lee,

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Cryptos Have Surged Since Soleimani Death, Bitcoin Tops $8,000

Courtesy of ZeroHedge View original post here.

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Source: Bloomberg

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Promotions

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