As a real estate professional I feel it's important to keep up with current events in the mortgage industry. Being a Loan Officer for a period of time has enhanced my skills as a Realtor. In this market Realtors need to have an understanding of real estate financing, it can make or break a deal in today's market. Understanding whats happening in the mortgage industry is critical when consulting first time buyers, move up buyers and investor's.  Anyone one can copy & paste the local numbers, IE; DOM, number of properties in escrow or on the market.

When specializing in a distressed market I believe it's critical to tract the number of defaulting mortgages,  the unemployment numbers and how the various Housing and Economic Recovery Acts are affecting the situation.  I don't think anyone wants to go out on the limb to predict when we will hit the bottom or if we have hit the bottom.

I found this article on one of my favorite websites WWW.housingwire.com and thought I would share it with you.

By AUSTIN KILGORE
August 7, 2009 8:39 AM CST

Government-sponsored enterprise (GSE) Fannie Mae (FNM: 0.66 -16.46%) said it needs a $10.7bn injection of cash from the Treasury Department to stay afloat after losing $14.8bn in Q209.

The Q209 loss, about $2.67 per share, is less than the $23.2bn ($4.09 per share) that Fannie had in Q109.

Fannie had $18.8bn in credit-related expenses, which was down from $20.9bn in Q109. The provision for credit losses was $18.2bn, but only $4.8bn of that was for net charge-offs. The remaining $13.4bn went toward building loss reserves, as Fannie expects continued losses.

It's the third time Fannie has been forced to go to Treasury for funds to stay in business, and brings the total amount of money loaned to the GSE under its preferred stock purchase with the Treasury to $45.9bn. It has requested the funds on or before September 30.

Reportsindicate that the ObamaAdministration may "wind down" Fannie and fellow GSE Freddie Mac (FRE: 0.74 -11.90%), and possibly spin off their bad assets into a federally backed corporation, a so-called "bad bank," and let the two companies keep their performing products. The White House denies this.

Fannie is seeing an across the board increase in delinquencies and defaults, even on loans considered less risky - those with lower loan to value ratios, higher borrower FICO scores and other variables.

"This general deterioration in our guaranty book of business is a result of the stress on a broader segment of borrowers due to the rise in unemployment and the decline in home prices," Fannie said in its quarterly report.

As you can see from this article Fannie Mae is reporting huge losses and an increase in delinquencies. According the Mortgage Bankers Association National Delinquency Survey, the delinquency rate for mortgage loans on one-to-four-unit residential properties was 8.22 percent on a non-seasonally adjusted basis, down 41 basis points from 8.63 percent in the fourth quarter of 2008.  Delinquency rates always decline in the first quarter of the year due to a variety of seasonal factors.  After accounting for these factors, the seasonally adjusted delinquency rate was 9.12 percent of all loans outstanding as of the end of the first quarter of 2009, up 124 basis points from the fourth quarter of 2008, and up 277 basis points from one year ago. 

The seasonally adjusted rate is the highest in the MBA's records going back to 1972 and the unadjusted rate is the highest recorded in the first quarter of any year back to 1972.

The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.  The percentage of loans in the foreclosure process at the end of the first quarter was 3.85 percent, an increase of 55 basis points from the fourth quarter of 2008 and up 138 basis points from one year ago.  Both the foreclosure inventory percentage and the quarter to quarter increase are record highs.

The combined percentage of loans in foreclosure and at least one payment past due, meaning the percentage of mortgage holders not current on their mortgages, was 12.07 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.

We are in challenging times. With the foreclosure moratorium being removed in fall, the delinquencies numbers raising and the current unemployment numbers, how could anyone speculate if we have hit the bottom. Stay tuned for the delinquency numbers in Q3 & Q4 2009.