The drumbeat goes on! Foreclosures increase! Late Mortgage Payments on the rise!
The new, 2nd Quarter Mortgage Bankers Association Delinquency Survey was released this week, and it shows that nearly one-tenth of all homeowers are either one-month behind in their mortgage payments, or in some stage of the foreclosure process.
The worst states for late pays and foreclosures - California and Florida, as you may have guessed. Other higher-than-average U.S. States include Nevada, Arizona, Michigan, Rhode Island and Ohio. The State of Illinois is also on the list, with the problem not as pronounced here as in other states, however.
But if you drive down some streets in Chicago, you might feel that the foreclosure numbers here are even higher!
Right now, down the block from one of our active listings on the Northwest Side of Chicago, in the Belmont Heights Neighborhood, there are seven houses in distress or short sale - and two bank-owned, boarded up properties, and another one might soon follow (no, not our listing, thankfully!)
Roughly 30% of sub-prime loans issued within the last couple of years are either delinquent or in foreclosure. And 5.35% of PRIME loans were at the same, distressed stage.
For FHA Loans - 14.87% were in or entering foreclosure at the end of last quarter. And this number is expected to increase in the coming months, as more and more FHA Loans are written this year.
But will these trends trash home prices in general?
No, according to conclusions drawn in a National Bureau of Economics Research opinion. (See Brian Blackstone' Real Time Economics Blog Post in Friday, September 5th's Wall Street Journal for more info, and a link to the opinion).
"Even in the face of an extreme foreclosure wave such as that experienced in 2007, our evidence indicates that foreclosure shocks have relatively small effects on U.S. house prices," the authors, Charles Calomiris of Columbia University and Stanley Longhofer and William Miles of Wichita State University wrote.
Under their "extreme" scenario, where home foreclosures would increase 75% over current levels, the authors predict home prices would only drop about 5.5% from their current levels between the Second Quarter, 2007 and the end of next year.
See our post today at BlogChicagoHomes.com for more info, as well as a link to James R. Hagerty's article in Friday's Wall Street Journal.
DEAN & DEAN'S TEAM CHICAGO
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