Home/Mortgages/August Housing Scorecard Points to a Fragile Recovery

September 2, 2011 (Chris Moore)

The housing market showed its fragility in July as the improvements brought on by seasonal selling trends the last few months gave way to a mixed bag of data that points to a recovery that is still a long ways off according to the latest release of the Obama Administrations Housing Scorecard.

Loan performance took a hit in July as delinquency rates unexpectedly increased across the board. At the end of July, prime mortgages that were at least 30 days of more delinquent increased to 4.5 percent from 4.4 percent in June, down from the peak of 5.9 percent seen in 2010.

Performance of sub-prime mortgages also took a turn for the worse as loans that were 30 days or more delinquent increased to 33.2 percent, up from a revised 32.9 percent in June, but down from 36.4 percent reported a year earlier.

Seriously delinquent mortgages, those that are more than 90 days delinquent or in foreclosure, were mixed in July.

Seriously delinquent prime mortgages showed improvement with 1.485 million loans in trouble at the end of July, down from 1.490 million in June and down from 1.742 million a year earlier.

Sub-prime mortgages that were seriously delinquent numbered 1.728 million in July, up from 1.721 million in June, but down from 1.817 million in July of last year.

Loans insured by the Federal Housing Administration (FHA) that were seriously delinquent increased to 599,000 in July, up from 585,000 in June and up from 560,000 in July 2010.

Since the beginning of the Homeowner Affordable Modification Program (HAMP) in 2009 until the end of June 2011, nearly 5 million modification arrangements have been started. In July, 28,300 homeowners received a permanent loan modification through HAMP raising the total amount of permanent modifications to 763,100. July’s HAMP efforts still fell short of the 31,600 completed in June.

HAMP trial modifications also declined in July with 22,100 new trial modifications started for the month, down from 24,700 in June. HOPE NOW proprietary modifications also declined in July, dropping to 51,600 modifications from a revised 56,400 modifications in June.

Through the end of June, HOPE NOW loan modifications have provided help for 2.423 million homeowners.

Home prices were slightly higher in July compared to June, but new and existing home sales declined leading to an increase in inventory supply from 9.2 months of supply to 9.4 months.

Foreclosure starts, Notice of Foreclosure Sales, and foreclosure completions all declined in July, but a constricted foreclosure pipeline led to an even larger decline in REO sales.

“The Obama Administration is dedicated to helping homeowners who were negatively affected by the housing crisis and this month’s scorecard shows signs of these programs working,” said HUD Assistant Secretary Raphael Bostic. “Data shows improvements in home prices, which have increased three months in a row, and a reduction in foreclosure starts and completions, which have been trending downward since fall 2010. Although the data suggests improvement, we are still continuing to work with homeowners, lenders, servicers, and others so that this positive trend continues. ”

Tags: August Housing Scorecard, Obama Administration, loan modifications, mortgage delinquencies, trial modifications, prime mortgages, sub-prime mortgages, FHA