January Scorecard: Continued Fragility with a Mixed Outlook

February 13, 2012 (Chris Moore)

The overall outlook of the housing market remained mixed through the end of the year with inventories and foreclosure activity showing improvement but with new home sales and home prices still in the doldrums according to the January release of the Obama Administration’s Housing Scorecard.

Loan performance remained about the same in December as the previous month with delinquencies on prime and sub-prime mortgages holding relatively steady while FHA loans worsened again during the month, but still better than a year ago.

At the end of December, the delinquency rate of prime mortgages that were at least 30 days or more delinquent was 4.4 percent, unchanged from November. In December of last year, the delinquency rate was also 4.4 percent.

Performance of sub-prime mortgages also held steady as the percentage of delinquent loans remained unchanged at 31.8 percent from November to December, but down from 34.1 percent posted a year earlier.

Delinquency rates of mortgages insured by the Federal Housing Administration (FHA) increased in December to 13.2 percent, up from 12.8 percent in November. The delinquency rate on FHA loans a year ago was 14.3 percent.

Seriously delinquent prime mortgages, those that are 90 days or more past due, declined slightly in December with 1.441 million loans in trouble, down from 1.449 million in November and also down from 1.584 million a year earlier.

Sub-prime mortgages that were seriously delinquent numbered 1.751 million in December, down slightly from 1.778 million in November. In December of last year, 1.828 million sub-prime mortgages were seriously delinquent.

Loans insured by the FHA that were seriously delinquent increased to 711,000 in December, up from 689,000 in November and also up from 589,000 in December 2010.

Since the beginning of the government’s mortgage assistance efforts in 2009 until the end of December 2011, over 5.6 million modification arrangements have been started. In December, 23,374 homeowners received a permanent loan modification through the Homeowner Affordable Modification Program (HAMP) while 20,079 trial modifications were started raising the total amount of all permanent modifications started to 933,327.

To date, homeowners that have received a permanent loan modification through HAMP saved a median of $531.35 per month on their mortgage payment, more than a one-third of their median before-modification payment.

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

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 November. Prices in all three Indices were down from a year ago.

Sales of new homes declined by a seasonally adjusted 2.3 percent from November to December while sales of existing homes increased by a seasonally adjusted 5.0 percent.

The inventory of existing homes declined in December to a 6.2 months supply, down from a revised 7.2 months supply of homes for sale in November. New home inventory increased to a 6.1 months supply of inventory, down from a revised 6.0 months supply in November.

Foreclosure activity improved in December with foreclosure starts declining 18.7 percent and foreclosure sales declining 12.0 percent. Compared to a year ago, foreclosure starts and sales are down substantially with starts down 52.0 percent and foreclosure sales down 17.6 percent.

Raphael Bostic, Assistant Secretary of HUD, stated, “While we should be encouraged by the positive trends on inventories and foreclosure starts, the mixed overall outlook means that we must remain diligent to improve conditions in the nation’s housing market. Responsible homeowners shouldn’t have to sit and wait for the housing market to hit bottom to get some relief. That’s why the Administration’s recent proposals are critical to promoting healing in the market. Our efforts to ramp up economic development in fragile neighborhoods and to expand homeowner access to low-interest refinance options reflect our commitment to turning these markets towards growth.”

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

Source:
HUD
Treasury Department