March 5, 2012 (Chris Moore)

The overall outlook for the housing market continues to be described as in a state of fragility in January, with housing inventories showing improvement and loan performance showing signs of stability, but with the fall in home prices showing no signs of ending according to the February release of the Obama Administration’s Housing Scorecard.

Loan performance improved slightly in January with delinquency rates on prime, sub-prime and FHA mortgages improving slightly on a monthly basis and with prime and sub-prime loans also showing improvement from a year ago.

At the end of January, the delinquency rate of prime mortgages that were at least 30 days or more delinquent was 4.2 percent, down from 4.4 percent in December. In January of last year, the delinquency rate was 4.7 percent.

Performance of sub-prime mortgages also improved as the percentage of delinquent loans fell to 31.2 percent from 31.8 percent in December and down from 36.2 percent posted a year earlier.

Delinquency rates of mortgages insured by the Federal Housing Administration (FHA) declined in January to 13.0 percent, down from 13.2 percent in December. The delinquency rate on FHA loans a year ago was 12.8 percent.

Seriously delinquent prime mortgages, those that are 90 days or more past due, increased in January with 1.432 million loans in trouble, down from a revised 1.411 million in December and also down from 1.588 million a year earlier.

Sub-prime mortgages that were seriously delinquent numbered 1.737 million in January, down slightly from a revised 1.745 million in December. In January of last year, 1.826 million sub-prime mortgages were seriously delinquent.

Loans insured by the FHA that were seriously delinquent increased to 734,000 in January, up from 711,000 in December, and also up from 612,000 in January 2011.

Since the beginning of the government’s mortgage assistance efforts in 2009 until the end of January 2011, over 5.7 million modification arrangements have been started. In January, 17,992 homeowners received a permanent loan modification through the Homeowner Affordable Modification Program (HAMP) while 16,759 trial modifications were started raising the total amount of all permanent modifications started to 951,319.

To date, homeowners that have received a permanent loan modification through HAMP saved a median of $532.73 per month on their mortgage payment, more than a one-third of their median before-modification payment.

HOPE NOW proprietary modifications decreased slightly in January to 55,687 modifications from 56,948 modifications in December.

Home prices were generally flat with two out of the three indices used in the Housing Scorecard posting very modest gains while one posted a slight decline through the end of December. Prices in all three Indices were down from a year ago.

Sales of new homes declined by a seasonally adjusted 0.9 percent from December to January while sales of existing homes increased by a seasonally adjusted 4.3 percent.

The inventory of existing homes declined in January to a 6.1 months supply, down from a revised 6.4 months supply of homes for sale in December. New home inventory fell to a 5.6 months supply of inventory, down from a revised 5.7 months supply in December.

Foreclosure activity worsened slightly in January with foreclosure starts increasing a modest 0.2 percent and foreclosure sales increasing by 1.3 percent. Compared to a year ago, foreclosure starts and sales are down substantially with starts down 22.3 percent and foreclosure sales down 20.3 percent.

Raphael Bostic, Assistant Secretary of HUD, stated, “Since April 2009, more than 13 million homeowners have taken advantage of our refinance programs. Following enhancements to the Home Affordable Refinance Program, another 300,000 families have already started the process of refinancing and stand to save on average $2,500 per year – the equivalent of a good-sized tax cut. So the Administration’s efforts have produced significant positive benefits. But 1 in 5 Americans still owes more than their home is worth. This lasting scar of the Great Recession driven by housing’s collapse is a clear sign that we are not yet out of the woods. That is why we are asking the Congress to approve the President’s housing proposals so that more homeowners can receive assistance.”

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

Treasury Department