More St. Louisans lagging on mortgage payments
Here’s another sign that the mortgage crisis is not easing.
One in every 23 St. Louis-area borrowers (4.3 percent) was at least 90 days behind on mortgage payments in May, according to new data out this week from First American Core Logic. That’s a steep jump from the one in 33 (3 percent) recorded in the same month last year. It’s also up sharply from 3.6 percent in April, though those monthly numbers are somewhat volatile.
The number of loans in the foreclosure process jumped, too, to 1.1 percent in May from 0.8 percent a year prior. But the percentage of loans repossessed by banks in May fell, to 0.4 percent from 0.6 a year ago. That echoes other recent data suggesting that banks, in the St. Louis region at least, are acting more slowly to actually take over foreclosed homes - perhaps giving borrowers more time to work out loan modifications.
St. Louis is faring better than the nation as a whole. Across the country, 6.5 percent of mortgages are 90 days or more past due and 2.5 percent are in foreclosure. Those numbers have been growing faster than comparable St. Louis figure, a sign of relative stability in our region’s housing market.
While many housing advocates think the worst of the subprime mortgage crisis has passed, they report more borrowers having trouble keeping up with traditional prime mortgages because of job loss and falling home values. Those factors, some experts say, will keep mortgage delinquencies and foreclosures high for some time to come.
| St. Louis area | U.S. | |
|---|---|---|
| 90+ days delinquent | ||
| May ‘09 | 4.30% | 6.50% |
| April ‘09 | 3.58% | 5.10% |
| March ‘09 | 4.30% | 6.20% |
| May ‘08 | 3.00% | 4.00% |
| Foreclosure rate | ||
| May ‘09 | 1.10% | 2.50% |
| April ‘09 | 0.80% | 1.80% |
| March ‘09 | 1.00% | 2.10% |
| May ‘08 | 0.80% | 1.50% |
| Repossessed rate | ||
| May ‘09 | 0.40% | 0.70% |
| April ‘09 | 0.49% | 0.62% |
| March ‘09 | 0.50% | 0.80% |
| May ‘08 | 0.60% | 0.60% |
| Source: First American Core Logic |
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Most of these posts are ridiculously ignorant of the math involved in owning vs. renting. You are not necessarily “throwing your money away” on rent. You are not necessarily making the right choice to walk away from a house you bought recently in a declining market.
A lot of what influences whether either of the above is a good move is what the future holds. While the future is anyone’s guess, there are CLEAR signs that houses are going to get cheaper in the next few years. How much? A lot. When you see new unemployment numbers each month topping 400k, 500k, even 600k, those are big numbers. Obviously, many of those people will be losing their homes. There will be others that decide that the $400k they signed up for on a house that is now worth $200k is worth walking away from.
Don’t listen to the “experts” in any field — take a huge dose of skepticism, realism, or pessimism… whatever you want to call it. There are specific mathematical formulas (available online) that point out the time-cost-of-money issues in renting vs. owning.
Brett is absolutely correct in holding on to his money until real estate prices fall further. We’re not at the bottom, so why should he buy? (In the first years of homeownership, you are paying the INTEREST AND LITTLE OF THE PRINCIPLE.) I don’t think we will see a bottom before end of 2010. Maybe much later. Houses will never be worth zero… but how much should it really cost to put a house up? It used to be that houses were built BY HAND. POWER HAND TOOLS DIDN’T EXIST prior to WWII. The labor hours to build a house are a small fraction of what they used to be. Houses should be cheap! And the land? Anyone’s guess what that is worth — it’s completely supply and demand. Yeah, god isn’t making any more of it, but there are MILLIONS of untouched acres. Think about it.
My own view is what we are seeing is the complete collapse of debt in the U.S. economy. The U.S., on local, state, and federal levels, has been maintaining a high standard of living by living off debt — in effect, living off future wealth (wealth that isn’t there). That can’t go on forever, and it is coming to an end.
The govt’s approach to stimulating the economy through greater debt is going to end up catastrophically. I must not be alone because people stockpiling food and ammo is becoming commonplace.
Don’t forget, the politicians have implemented incentives for people NOT to pay their mortgage.
Irishlady is right. Loan modifications are below the prime lending rates that you may see advertised. The key to getting a Loan Mod is that you have documentable hardship such as losing a job, reduction of income, illness, death in the family. The companies that do these interface with your current lender, so this is not a refi. Also, it is not a substitute for a refi. The process takes 6-12 weeks. You don’t have to be behind in your payments but proving that you are heading for trouble is required. Also, you can be upside down on your house. Please know that Jay Nixon has been working to close down the LM companies that have been taking people’s money and delivering nothing. There were plenty of companies that exploited a situation. I do them for a fee, but the payments are in installments with half of the money being paid once completed. NACA is a good way to go, but they are so backed up. I don’t want to violate any posting rules here nor do I want to look like I am advertising without paying, but I would help those that are interested or explain what I know about the LM’s if you can email me. There are so many financially responsible people that have been blindsided by this economy and job loss that are fighting foreclosure. Please keep the faith.
According to the NACA website for new home buyers you have to become a memeber. Pay $50 bucks a month for upwards of 5-10 years.