Thursday, September 29, 2011
I Think I'll Bother
One in five homeowners whose mortgages were modified under a program aimed at reducing foreclosures defaulted again within a year after their payments were cut, the U.S. Comptroller of the Currency reported today.The report is OCC's Mortgage Metrics for Q2. A picture is worth a thousand words, so this chart from page 45 should be worth at least 500:
The important column is the "Current" Column. Very few of the mortgages exit via pay-off, although probably a lot are written down on short-sale or DIL - (most of rightmost column).
Now needless to say, as time rolls on more and more modified mortgages will default. For 2008, less than 29% of these mortgages are current or paid off. For mortgages modified in the first quarter of 2011, ONLY 77.7% are CURRENT. This is still an appallingly bad performance after at most five modified scheduled mortgage payments.
Beginning on page 5 you can see a breakdown of performance by 60 day delinquency rates at 3, 6, 9 and 12 months by year of modification, beginning with 2008 and ending with Q1 2011. The quality has improved overall, but still is pretty bad considering how much the payments have been dropped (see page 36 for 30 days plus after a year), but now delinquency rates on the overall mortgage portfolio have started rising again.
I really hate this report, because it seems to me that there are elements of dishonesty and, well, spin in the way the data is presented. I guess I'll write more on this tomorrow - I've shut up all these months, but I'm really irked now.
Because when I look at that chart it seems pretty horrific. Seriously delinquent looks like it spikes pretty hard within 12-18 months.
The very poor quality of Calif tract housing and its lack of durability will impact prices for many generations here. Its not in the data but those that have bothered to look under the covers understand the financial drain these homes will have on homeowners/investors as time marches on.