by Calculated Risk on 11/20/2011 03:50:00 PM

"In the near future", the NAR is expected to revise down their estimates of existing home sales for the last few years. Tom Lawler wrote back in January 2011:

As many readers may recall, over the last year and a half I have noted numerous times that the NAR’s estimates for existing home sales appear to have understated the decline in existing home sales since 2006, with the “gap” increasing from 2007 through 2009. The basis for that assertion was that existing home sales based on property records in some key states declined materially more than did the NAR’s estimate of existing home sales in those states. In addition, CoreLogic’s estimates of existing home sales based on property records in its database (which covers “over 80%”of the US housing market) show materially larger declines since 2006 than do the NAR’s estimates.

The NAR is aware of these “discrepancies” and has been since at least 2009, but changing its methodology is not a trivial task. However, reportedly the NAR (working with others) has been looking into this issue, and is exploring whether it needs to change its methodology to get better estimates of “actual” existing home sales.

And from CoreLogic in February 2011: CoreLogic: NAR’s 2010 existing home sales are overstated by 15% to 20%

Historically, the CoreLogic existing sales data have covered about 85% to 90% of all NAR’s existing home sales data. However, in 2006 NAR’s sales data became elevated relative to the CoreLogic, MBA, HMDA and Census sales related data, and that trend has continued and become more pronounced through 2010. There are several reasons for the divergence, including benchmarking drift, more sales going through MLS systems due to consolidation and a lower share of for sale by owners (FSBO) home sales. Net, NAR’s existing home sales data are overstated by about 15% to 20%.

Apparently the NAR is getting close to releasing the new methodology for estimating sales, from the NAR on November 11th:

NAR presently is benchmarking existing-home sales, and downward revisions are expected for totals in recent years, although there will be little change to previously reported comparisons based on percentage change. There will be will be no change to median prices or month’s supply of inventory. Publication of the improved measurement methodology is expected in the near future.

The most important aspect of this revision is the "improved measurement methodology" so that we will have more accurate information in the future. The next most important part of the revision is the level of "visible" inventory. According to the NAR release, inventory will be revised down for the last several years by the same amount as sales, keeping the months of supply the same as originally released. With the NAR revisions, I expect listed inventory to be at the lowest level since late 2005.

That means we can estimate the downward revisions to sales by looking at other sources of inventory data. I've been using the monthly inventory data from deptofnumbers (aka housingtracker) for 54 metro areas.

Click on graph for larger image.

This graph adjusts the reported NAR inventory by the HousingTracker changes, using 2006 as the starting point.

The gap between the NAR reported inventory and the HousingTracker inventory steadily increased over the last 5 years. The "drift" was fairly gradual, but cumulative over the last 5 years or so.

Using the HousingTracker data, here is what the adjustment to the NAR sales would look like (this is NOT the NAR adjustment):

Year	Sales, as Reported	YoY Change, as Reported	Adjustment	Sales, Adjusted	YoY Change, Adjusted
2007	5,652,000	-12.7%	-2.8%	5,495,000	-15.2%
2008	4,913,000	-13.1%	-4.5%	4,691,000	-14.6%
2009	5,156,000	4.9%	-10.0%	4,642,000	-1.0%
2010	4,908,000	-4.8%	-13.4%	4,250,000	-8.4%
20112	4,950,000	0.9%	-15.1%	4,201,000	-1.2%
1An example of adjustment, this is NOT the NAR adjustment, 2estimate for 2011

These adjustments might be a little high, but I expect the current year sales to be revised down by 10% to 15%. CoreLogic expects 2010 sales to be revised down by 15% to 20%.

Hopefully the revisions will be released soon.

by Calculated Risk on 11/20/2011 09:15:00 AM

From the WaPo: Supercommittee likely to admit defeat on debt deal

The congressional committee tasked with reducing the federal deficit is poised to admit defeat as soon as Monday ...

... many economists consider particularly urgent the need to extend jobless benefits and the one-year payroll tax cut. ... the payroll tax cut, enacted last December, allows most American workers to keep an additional 2 percent of their earnings, a boon to tight household budgets as well as the economic recovery. Economists at J.P. Morgan Chase recently estimated that if Congress does not extend the two measures, economic growth next year could take a hit of as much as two percentage points — enough to revive fears of a recession.

Just about everyone expected the committee to fail. The key is how much fiscal tightening happens next year - as I've noted before, the two most significant downside risks to the U.S. economy in 2012 are the European financial crisis and more fiscal tightening.

As Goldman Sachs economist noted on November 11th, the impact from not extending the payroll tax cut would be significant: "Our forecast assumes that the payroll tax cut is extended for another year; if that failed to happen, the fiscal drag in early 2012 would rise significantly." And their forecast for Q1 2012 is for 0.5% GDP growth ...

Yesterday:
• Summary for Week Ending Nov 18th
• Schedule for Week of Nov 20th
• Lawler: Household Growth by Age Group: 2010 – 2015 “Conservative” Forecasts

by Calculated Risk on 11/19/2011 07:13:00 PM

Note: this is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Nov 18, 2011. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

Activity on the Unofficial Problem Bank List picked-up this week. There were five removals, one addition, and assets were updated through September 30, 2011. After these changes, the list includes 977 institutions with assets of $399.1 billion. During the quarter, assets for remaining banks on the Unofficial Problem Bank List declined by $5.9 billion. A year ago, the list had 903 institutions with assets of $419.6 billion.

The removals include one action termination -- Royal Bank America, Narberth, PA ($900 million Ticker: RBPAA); two unassisted mergers -- The Bank of Texas, Devine, TX ($51 million) and United Kentucky Bank of Pendleton County, Inc., Falmouth, KY ($28 million); and two failures -- Central Progressive Bank, Lacombe, LA ($398 million) and Polk County Bank, Johnston, IA ($99 million).

Added this week is Village Bank, Midlothian, VA ($600 million Ticker: VBFC). We do not expect the FDIC to close any banks next week because of the holiday but we do anticipate for the FDIC and OCC to provide an update on their problem bank activities for the past month.

Earlier:
• Summary for Week Ending Nov 18th
• Schedule for Week of Nov 20th
• Lawler: Household Growth by Age Group: 2010 – 2015 “Conservative” Forecasts

by Calculated Risk on 11/19/2011 03:44:00 PM

Some food for thought from economist Tom Lawler:

The tables below assume continued low immigration and two scenarios for headship rates: 1) an average of Census 2000 and 2010 headship rates, and 2) just Census 2010 headship rates.

CR Note: Under both scenarios - the average of Census 2000 and 2010 headship rates and just using the 2010 headship rates - there will be a fairly strong increase in younger households over the next few years (the apartment analysts have been making this argument).

Even with a 50%+ increase in multi-family starts in 2011, the builders will have only started around 150,000 to 160,000 units this year. Based on these projections, multi-family starts will increase further over the next few years.

And look at the projected increase in 55 to 74 year old households. That will probably be a key segment of growth for households. Of course headships rates could fall further (the older people could move in with their kids), but this suggests positive demographics for housing over the next several years.

Tables and calculations by Tom Lawler:

US Households by Age Group: Headship Rates Equal to 2000 and 2010 Average
Age	2010	2015	Avg. Annual Change
15-24	5,401	5,781	76
25-34	17,957	19,448	298
35-44	21,291	21,277	-3
45-54	24,907	24,324	-117
55-64	21,340	24,053	543
65-74	13,505	17,033	706
75+	12,315	12,692	75
Total	116,716	124,608	1,578

US Households by Age Group: Headship Rates Stay at 2010 Lows
Age	2010	2015	Avg. Annual Change
15-24	5,401	5,401	0
25-34	17,957	18,983	205
35-44	21,291	21,024	-53
45-54	24,907	24,069	-168
55-64	21,340	24,012	534
65-74	13,505	16,981	695
75+	12,315	12,918	121
Total	116,716	123,388	1,334

by Calculated Risk on 11/19/2011 12:41:00 PM

Earlier:
• Summary for Week Ending Nov 18th

The key U.S. economic reports for the coming week are the October Personal Income and Outlays report, and the second estimate of Q3 GDP report. Also Existing Home sales for October will be released on Monday.

Several high frequency releases will be closely watched: weekly initial unemployment claims, consumer sentiment (final) and two more regional Fed manufacturing surveys. Because of the Thanksgiving Holiday on Thursday, weekly initial unemployment claims will be released on Wednesday.

----- Monday, Nov 21st -----
8:30 AM ET: Chicago Fed National Activity Index (October). This is a composite index of other data.

10:00 AM: Existing Home Sales for October from the National Association of Realtors (NAR). The consensus is for sales of 4.80 million at a Seasonally Adjusted Annual Rate (SAAR) in October. Economist Tom Lawler estimates the NAR will report sales of 4.86 million.

Note: the NAR is working on benchmarking existing home sales for previous years with other industry data (expectations are for large downward revisions). There is no firm date for the release of these revisions.

Expected: The Moody's/REAL Commercial Property Price Index (commercial real estate price index) for September.

----- Tuesday, Nov 22nd -----
8:30 AM: Gross Domestic Product, 3rd quarter 2011 (second estimate); Corporate Profits, 3rd quarter 2011 (preliminary estimate). This is the second estimate from the BEA. The consensus is that real GDP increased 2.4% annualized in Q3, down from the advance estimate of 2.5%.

The graph shows quarterly GDP growth (annualized) with the advance estimate in blue.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for November. The consensus is for the index to be at -1, up from -6 in October (below zero is contraction).

10:00 AM: Regional and State Employment and Unemployment (Monthly) for October 2011

2:00 PM: FOMC Minutes, Meeting of November 1-2, 2011. These minutes will be fairly negative with a discussion of the significant downside risks from Europe, and the negative revision to forecasts.

----- Wednesday, Nov 23rd -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been especially weak since early August, although this doesn't include cash buyers.

8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for a slight increase to 390,000 from 388,000 last week. The 4-week average has recently declined below 400,000.

8:30 AM: Durable Goods Orders for October from the Census Bureau. The consensus is for a 1.0% decrease in durable goods orders after decreasing 0.8% in September.

8:30 AM: Personal Income and Outlays for October. The graph shows real Personal Consumption Expenditures (PCE) through September (2005 dollars).

PCE increased 0.6 in September, and real PCE increased 0.5%. The price index for PCE increased 0.2 percent in September.

The consensus is for a 0.3% increase in personal income in October, and a 0.3% increase in personal spending, and for the Core PCE price index to increase 0.1%.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for November). The consensus is for a slight increase to 64.6 from the preliminary reading of 64.2.

11:00 AM: Kansas City Fed regional Manufacturing Survey for November.

----- Thursday, Nov 24th -----
Thanksgiving Day: All Markets Closed.

----- Friday, Nov 25th -----
Markets open, will close early at 1:00 PM ET.

by Calculated Risk on 11/19/2011 08:05:00 AM

Another week, same lead sentence: The drama in Europe continues to overshadow the U.S. economic situation and the European financial crisis continues to pose the greatest downside risk to the U.S. economy. That said ...

In the U.S., the economic data continues to show improvement. The four week average of initial weekly unemployment claims fell below 400,000 for the first time since April. Retail sales were solid in October. Housing starts declined slightly – due to the volatile multi-family starts segment – but were well above expectations.

For manufacturing, industrial production and capacity utilization continued to increase, and both the NY Fed and Philly Fed surveys showed some expansion (the first time both showed expansion since May).

Mortgage delinquencies declined in Q3 (slowly), and inflation moderated in October. All positive news for the economy and the news flow led to several Q4 upgrades, from Bloomberg: “Economists at JPMorgan Chase & Co. (JPM) in New York now see gross domestic product rising 3 percent in the final quarter, up from a previous prediction of 2.5 percent. Macroeconomic Advisers in St. Louis increased its forecast to 3.2 percent from 2.9 percent at the start of November, while New York-based Morgan Stanley & Co. boosted its outlook to 3.5 percent from 3 percent.” Also Merrill Lynch has increased their Q4 forecast to 3.0%.

Here is a summary in graphs:

• Housing Starts declined slightly in October

Click on graph for larger image.

Total housing starts were at 628 thousand (SAAR) in October, down 0.3% from the revised September rate of 630 thousand (SAAR). Most of the increase this year has been for multi-family starts.

Single-family starts increased 3.9% to 430 thousand in October.

Multi-family starts are increasing in 2011 - although from a very low level. This was well above expectations of 605 thousand starts in October.

Single family starts are still "moving sideways".

• Retail Sales increased 0.5% in October

On a monthly basis, retail sales were up 0.5% from September to October (seasonally adjusted, after revisions), and sales were up 7.9% from October 2010. Retail sales excluding autos increased 0.6% in October. Sales for September were unrevised with a 1.1% increase.

This graph shows retail sales since 1992. This is monthly retail sales and food service, seasonally adjusted (total and ex-gasoline).

Retail sales are up 19.5% from the bottom, and now 5.1% above the pre-recession peak (not inflation adjusted)

This was well above the consensus forecast for retail sales of a 0.2% increase in October, and no change ex-auto. This was a solid report, especially following the very strong September report.

All current retail sales graphs
• Industrial Production increased 0.7% in October, Capacity Utilization increased

"Industrial production expanded 0.7 percent in October after having declined 0.1 percent in September. Previously, industrial production was reported to have gained 0.2 percent in September ... Capacity utilization for total industry stepped up to 77.8 percentThis graph shows Capacity Utilization."

Capacity utilization at 77.8% is still 2.6 percentage points below its average from 1972 to 2010 and below the pre-recession levels of 81.3% in December 2007.

The second graph shows industrial production since 1967.

Industrial production increased in October to 94.7, however September was revised down.

The consensus was for a 0.4% increase in Industrial Production in October, and an increase to 77.6% for Capacity Utilization. Adjusting for the downward revision for September, this was about at consensus.
All current manufacturing graphs
• MBA: Mortgage Delinquencies decline slightly in Q3

The MBA reported that 12.42 percent of mortgage loans were either one payment delinquent or in the foreclosure process in Q3 2011 (delinquencies seasonally adjusted). This is down slightly from 12.87 percent in Q2 2011.

This graph shows the percent of loans delinquent by days past due.

Loans 30 days delinquent decreased to 3.19% from 3.46% in Q2. This is the lowest level since early 2007. Delinquent loans in the 60 day bucket decreased slightly to 1.30% from 1.37% last quarter. This is the lowest level since Q1 2008. There was a decrease in the 90+ day delinquent bucket too. This decreased to 3.50% from 3.61% in Q2 2011. This is the lowest level since 2008. This decrease was probably due to the pickup in foreclosure actions.

The percent of loans in the foreclosure process was unchanged at 4.43%.

This graph shows the percent of loans in the foreclosure process by state and by foreclosure process. Red is for states with a judicial foreclosure process. Because the judicial process is longer, those states typically have a higher percentage of loans in the process. Nevada is an exception.

Florida, Nevada, New Jersey, Illinois and New York are the top five states with percent of loans in the foreclosure process. In Arizona and California, the percent of loans in the foreclosure process is declining fairly rapidly.

This graph shows all delinquent loans by state (sorted by percent seriously delinquent).

Florida and Nevada have the highest percentage of serious delinquent loans, followed by New Jersey, Illinois, and New York.

So the delinquency rate improved in each bucket (30+, 60+, 90+ days), but the percent of loans in the foreclosure process was unchanged. The key problem remains the very high level of seriously delinquent loans and loans in the foreclosure process.
All current mortgage delinquency graphs.
• AIA: Architecture Billings Index increased in October

This graph shows the Architecture Billings Index since 1996. The index increased to 49.4 in October from 46.9 in September. Anything below 50 indicates contraction in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So the recent surveys suggests further declines in CRE investment in 2012.
All current Commercial Real Estate graphs
• Regional Fed Manufacturing Surveys: Empire and Philly

From the Philly Fed: Regional manufacturing is expanding, but at a slow pace

From the NY Fed: Conditions for New York manufacturers held steady in November.

Here is a graph comparing the regional Fed surveys and the ISM manufacturing index. The dashed green line is an average of the NY Fed (Empire State) and Philly Fed surveys through November. The ISM and total Fed surveys are through October.

The average of the Empire State and Philly Fed surveys increased again in November, and is has been slightly positive for two months.
All current manufacturing graphs
• Rate of increase slows for Key Measures of Inflation in October

"According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.3% annualized rate) in October. The 16% trimmed-mean Consumer Price Index increased 0.1% (1.4% annualized rate) during the month.
...
The CPI less food and energy increased 0.1% (1.6% annualized rate) on a seasonally adjusted basis. ... Over the last 12 months, the median CPI rose 2.2%, the trimmed-mean CPI rose 2.5%, the CPI rose 3.5%, and the CPI less food and energy rose 2.1%."

On a year-over-year basis, these measures of inflation are increasing, and are slightly above the Fed's target. However, on a monthly basis, the rate of increase is mostly below the Fed's target. On a monthly basis, the median Consumer Price Index increased 2.3% at an annualized rate, the 16% trimmed-mean Consumer Price Index increased 1.4% annualized, and core CPI increased 1.6% annualized.

These key price measures increased at a lower rate than in September.

• Weekly Initial Unemployment Claims: Four Week average falls under 400,000

"In the week ending November 12, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 5,000 from the previous week's revised figure of 393,000. The 4-week moving average was 396,750, a decrease of 4,000 from the previous week's revised average of 400,750."

The following graph shows the 4-week moving average of weekly claims since January 2000.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased this week to 396,750. This is the lowest level for the 4 week average since early April - although this is still elevated.
All current Employment Graphs
• Residential Remodeling Index at new high in September

The BuildFax Residential Remodeling Index was at 141.4 in September, up from 138.6 in August. This is based on the number of properties pulling residential construction permits in a given month.

This is the highest level for the index (started in 2004) - even above the levels from 2004 through 2006 during the home equity ("home ATM") withdrawal boom.

Note: Permits are not adjusted by value, so this doesn't mean there is more money being spent, just more permit activity. Also some smaller remodeling projects are done without permits and the index will miss that activity.

Even though new home construction is still moving sideways, two other components of residential investment will increase in 2011: multi-family construction and home improvement.

• Other Economic Stories ...
• LPS: House Price Index Shows 3.8 Percent Year-Over-Year Decline in August
• NAHB Builder Confidence index increases in November

by Calculated Risk on 11/18/2011 09:45:00 PM

On the mess in Greece, from the Athens News: Troika back in town

Prime Minister Lucas Papademos ... must win pledges from the rival parties that they will do what it takes to meet bailout terms or Greece's lenders will withhold an 8bl euro aid tranche Athens needs to dodge default next month, plus longer-term financing later.

As part of that process, representatives from the "troika" of the International Monetary Fund, the European Union and European Central Bank met with [Finance minister] Venizelos and Papademos on Friday and it is expected that Pasok party leader George Papandreou will be meeting the troika at his office in Parliament at 10:30 on Saturday morning. ND leader, Antonis Samaras is also due to meet officials from troika on Saturday.

Tensions have risen between coalition partners, Pasok and ND, as the latter's leader, Antonis Samaras, has refused to sign the commitment sought by EU and IMF authorities.

Underscoring the pressure on Athens, the Dutch finance minister said the Greek parties had "to make a clear and unequivocal choice in writing" by signing a pledge. ... "Are they with us, or not? We don't have the luxury of patience any longer," Jan Kees de Jager said.

Samaras said on Thursday said he wanted to win an outright majority in the snap election to reverse the austerity measures he disagrees with.

Samaras may be correct about the austerity measures, but if he doesn't sign the agreement, I doubt the Troika will provide the 8 billion euro aid tranche - and Greece would then default in December.

From the NY Times: Europe Fears a Credit Squeeze as Investors Sell Bond Holdings

Financial institutions are dumping their vast holdings of European government debt and spurning new bond issues by countries like Spain and Italy. And many have decided not to renew short-term loans to European banks, which are needed to finance day-to-day operations.
...
The pullback — which is increasing almost daily — is driven by worries that some European countries may not be able to fully repay their bond borrowings, which in turn would damage banks that own large amounts of those bonds. It also increases the already rising pressure on the European Central Bank to take more aggressive action.

On Friday, the bank’s new president, Mario Draghi, put the onus on European leaders to deploy the long-awaited euro zone bailout fund to resolve the crisis, implicitly rejecting calls for the European Central Bank to step up and become the region’s “lender of last resort.”

by Calculated Risk on 11/18/2011 07:09:00 PM

Unfortunately
These recent Occupied banks
Are not on Wall Street
by Soylent Green is People
From the FDIC: Grinnell State Bank, Grinnell, Iowa, Assumes All of the Deposits of Polk County Bank, Johnston, Iowa

As of September 30, 2011, Polk County Bank had approximately $91.6 million in total assets and $82.0 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $12.0 million. ... Polk County Bank is the 89th FDIC-insured institution to fail in the nation this year, and the first in Iowa.

From the FDIC: First NBC Bank, New Orleans, Louisiana, Assumes All of the Deposits of Central Progressive Bank, Lacombe, Louisiana

As of September 30, 2011, Central Progressive Bank had approximately $383.1 million in total assets and $347.7 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $58.1 million. ... Central Progressive Bank is the 90th FDIC-insured institution to fail in the nation this year, and the first in Louisiana.

A first this year for both states.

by Calculated Risk on 11/18/2011 04:02:00 PM

From economist Tom Lawler:

Based on my regional tracking, I estimate that existing home sales as measured by the National Association of Realtors ran at a seasonally adjusted annual rate of about 4.86 million in October, down 1.0% from September’s pace, and up 11% from last October’s pace. Compared to a year ago sales showed little growth (or actual declines) in a number of northeast and mid-Atlantic areas.

Active listings were clearly down again in October from September, with my “best guess” nationwide being a drop of 3.5%. NAR’s inventory numbers don’t often track publicly-available listings, but I’d guess NAR’s numbers will show a similar monthly drop. If that were the case, the NAR’s existing home inventory number would show a YOY decline of about 13.1% (less than publicly-available listings data would suggest, but that has been the case for a while.)

On the median sales price side, a larger % of realtor groups/MLS/etc. reported YOY declines in median sales prices in October than was the case in September, and in many others reported larger YOY % declines in October than in September. Based on the data I have, I estimate that the NAR will show an October median existing home sales price that is about 5.2% lower than last October. In September the NAR’s MSP showed a YOY drop of 3.5%.

CR Note: The NAR is scheduled to release their October existing home sales report on Monday November 21st at 10 AM ET. The consensus is for sales of 4.80 million (close to Tom's estimate). With a 3.5% decline in inventory, this would give 8.3 months of supply, down from the reported 8.5 months in September. Also - the NAR might announce the release of the "benchmark revisions" that are expected to show downward revisions for sales and inventory since 2006 or so.

by Calculated Risk on 11/18/2011 01:30:00 PM

By request, the following graphs show the percent of loans delinquent by loan type: Prime, Subprime, FHA and VA. First a table comparing the number of loans in 2007 and Q3 2011 so readers can understand the shift in loan types.

Both the number of prime and subprime loans have declined over the last four years; the number of subprime loans is down by about one-third. Meanwhile the number of FHA loans has increased sharply.

Note: There are about 50 million total first-lien loans - the MBA survey is about 88% of the total.

MBA National Delinquency Survey Loan Count
	Q2 2007	Q3 2011	Change	Q3 2011 Seriously Delinquent
Prime	33,916,830	31,302,080	-2,614,750	1,734,135
Subprime	6,204,535	4,193,659	-2,010,876	1,077,351
FHA	3,030,214	6,594,478	3,564,264	553,277
VA	1,096,450	1,436,140	339,690	66,493
Survey Total	44,248,029	43,526,357	-721,672	3,431,256

Click on graph for larger image in graph gallery.

First a repeat: This graph shows the percent of loans delinquent by days past due. Loans 30 days delinquent decreased to 3.19% from 3.46% in Q2. This is the lowest level since early 2007.

Delinquent loans in the 60 day bucket decreased slightly to 1.30% from 1.37% last quarter. This is the lowest level since Q1 2008. There was a decrease in the 90+ day delinquent bucket too. This decreased to 3.50% from 3.61% in Q2 2011. This is the lowest level since 2008. This decrease was probably due to the pickup in foreclosure actions.

The percent of loans in the foreclosure process was unchanged at 4.43%.

Note: Scale changes for each of the following graphs.

The second graph is for all prime loans.

This is the key category now ("We are all subprime!", Tanta).

Since there are far more prime loans than any other category (see table above), about half the loans seriously delinquent now are prime loans - even though the overall delinquency rate is lower than other loan types.

This graph is for subprime. This category gets most of the attention - mostly because of all the terrible loans made through the Wall Street "originate-to-distribute" model and sold as Private Label Securities (PLS). Not all PLS was subprime, but the worst of the worst loans were packaged in PLS.

Although the delinquency rate is still very high, the number of subprime loans had declined sharply.

This graph is for FHA loans. The delinquency rate decreased in Q3 and has mostly been declining the last couple years. Some of the decline is because most of the FHA loans were made in the last few years, not in the 2004 to 2006 period like subprime.

Another reason for the improvement was eliminating Downpayment Assistance Programs (DAPs). These were programs that allowed the seller to give the buyer the downpayment through a 3rd party "charity" (for a fee of course). The buyer had no money in the house and the default rates were absolutely horrible. HUD mentioned this in the annual review of the FHA financial status.

The last graph is for VA loans.

All four categories saw a decrease in overall delinquencies Q3.

There are still quite a few subprime loans that are in distress, but the real keys going forward are prime loans and FHA loans.

All current mortgage delinquency graphs.