Now it's official: the Mortgage Bankers Association, a major banking industry interest group, has released a report that confirms what many (myself included) have feared for the past several months.
Four million American homeowners with a mortgage were either delinquent on their payments or in some stage of foreclosure for the quarter ending June 30, 2008. That's nine percent of all homeowners with a mortgage.
What's worse, it's not just subprime loans that are going belly-up. An increasing number of homeowners are being caught short by a combination of resetting loan rates and declining home values. Many people with good credit are suffering because of exotic loan products like option ARMs with negative amortization. In many parts of the country, homeowners cannot sell or refinance, because their loan balances exceed the value of their properties.
This situation will get worse before it gets better: something like 2 million ARMs are going to reset to higher rates in the next 12 months...unless lenders heed their own trade group and step up to the plate.
Now that's a lot of homeowners... if this keeps up then the ramp time for recovery is going to be somewhat hard. Hope this ends soon.
Such a huge percentage of homeowners. It is absolutely incredible and looks like it will get worse before it gets better.
Not to mention that even with the new FHA Secure program, this will not help those who qualified under a stated doc type. I agree, that this will get worse before it gets better.