The Mortgage Corner

“There is no question that housing starts and residential investment have bottomed,” says Calculated Risk, perhaps the best real estate blog. “And it appears new home sales have also bottomed. For the housing industry, the recovery has started. The debate is about the strength of the recovery, not whether there is a recovery”

We agree. Not only have new home construction and sales picked up, but the new HARP 2.0 Fannie/Freddie “refinance plus” programs are kicking into high gear, thus reducing the short sale and foreclosure inventories.

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Graph: Calculated Risk

On the national level, inventory of for-sale single family homes, condominiums, townhouses and co-ops declined by -21.48 percent in March 2012 compared to a year ago, and declined in one month in all but two of the 146 markets covered by Realtor.com, said its March 2012 Real Estate Data report.

The median age of the inventory fell 19.82 percent on a year-over-year basis last month and the median national list price was up by 5.56 percent last month to $163,800 compared to March 2011.

This is while sovereign debt worries in Europe led to a drop in rates last week, with the 30-year rate tying its early February low. Refinance activity picked up in response, increasing 13.5 percent for the week. “Participants in our survey indicated that about 32 percent of this refinance volume was for HARP loans," said Jay Brinkmann, MBA’s Chief Economist "While purchase activity declined sharply for the week, this was mostly due to a 23 declined sharply for the week, this was mostly due to a 23 percent drop in applications for FHA purchase loans. This drop follows big increases in the demand for FHA loans over several weeks in anticipation of the FHA mortgage insurance premium increases that went into effect last week. The demand for conventional purchase loans was down only slightly."

This in turn has pushed down both delinquency and foreclosure rates.

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Graph: Calculated Risk

And according to The December Mortgage Monitor released by Lender Processing Services (LPS), 8.15 percent of mortgages were delinquent in December, unchanged from November, and down from 8.83 percent in December 2010, also the lowest since end of the recession.

LPS reports that 4.11 percent of mortgages were in the foreclosure process, down from 4.16% in November, and down slightly from 4.15% in December 2010.

This gives a total of 12.26 percent delinquent or in foreclosure, of the more than 50 million outstanding mortgages. It breaks down as:
• 2.31 million loans less than 90 days delinquent.
• 1.79 million loans 90+ days delinquent.
• 2.07 million loans in foreclosure process.
For a total of 6.17 million loans delinquent or in foreclosure in December.

What will this do for housing prices is the next question? 

Harlan Green © 2012