by Calculated Risk on 8/13/2012 01:24:00 PM

Last week the MBA released the results of their Q2 National Delinquency Survey. One of the key points was the difference in the number of mortgage in the foreclosure process between judicial and non-judicial foreclosure states.

The first graph below (repeat) is from the MBA and shows the percent of loans in the foreclosure process by state. Posted with permission.

The second graph shows all stages of delinquency (and in-foreclosure) by states, sorted by the percent seriously delinquent (90+ days plus in-foreclosure).

Click on graph for larger image in graph gallery.

The top states are Florida (13.70% in foreclosure down from 14.31% in Q1), New Jersey (7.65% down from 8.37%), Illinois (7.11% down from 7.46%), New York (6.47% up from 6.17%) and Nevada (the only non-judicial state in the top 13 at 6.09% down from 6.47%).

As Jay Brinkmann noted, California (3.07% down from 3.29%) and Arizona (3.24% down from 3.57%) are now a percentage point below the national average.

The second graph includes all delinquent loans (sorted by percent seriously delinquent).

Florida and New Jersey have the highest percentage of serious delinquent loans, followed by Nevada, New York, Illinois, Maine and Maryland. Nevada still leads with the highest percent of loans 90+ days delinquent.

Previous high delinquency states like California and Arizona are now well down the list.

Comment: It continues to bother me that several southern states always have an elevated percentage of mortgage loans 30+ day delinquent (Mississippi, Alabama, Georgia, and Louisiana all have a large percentage light blue). Most of these borrowers always seem to catch up - they just make their payments late. That means lenders generate plenty of late fees in these states. This might be something for the Consumer Financial Protection Bureau to investigate.

by Calculated Risk on 8/13/2012 09:21:00 AM

On Sunday I put together a short list of key dates in Europe in September and October when European policymakers return from vacation.

Here are a couple more stories this morning ...

From Reuters: Italy Public Debt Hits Record High, Deficit Also up

Public debt at the end of June rose 6.6 billion euros to 1.973 billion euros, the Bank of Italy said ... The economy contracted 0.7 percent in the second quarter and gross domestic product was down 2.5 percent from a year earlier. ...
Italy's one-year borrowing costs rose marginally at auction on Monday, with uncertainty over how and when the European Central Bank might move to ease both the country's and the region's mounting debt problems tempering appetite for risk.

From the Athens News: GDP sinks 6.2% in second quarter

The country’s economy contracted 6.2 percent in the second quarter ... Currently in its fifth consecutive year, the economic downturn has driven unemployment to record highs, with nearly one in four unemployed and more pain expected ahead. ...
The jobless rate has already climbed to 23.1 percent, with nearly 55 percent of those aged 15-24 out of work.

Europe will be in the headlines again soon and policymakers will be busy in September and October.

by Calculated Risk on 8/12/2012 09:36:00 PM

This will be a busy week for economic data, but there are no releases scheduled for Monday.

The Asian markets are mixed tonight, with the Nikkei up slightly and the Shanghai Composite down slightly.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P future are down slightly, and the DOW futures up slightly.

Oil prices are moving up again with WTI futures are at $93.30 and Brent is at $113.40 per barrel. Using the calculator at Econbrowser suggests national gasoline prices at about $3.67 per gallon.

Yesterday:
• Summary for Week Ending Aug 10th
• Schedule for Week of Aug 12th

Four more questions for the August economic prediction contest (Note: You can now use Facebook, Twitter, or OpenID to log in).

by Calculated Risk on 8/12/2012 04:43:00 PM

A few miscelleneous dates (just making some notes).

First, for Europe it looks like September and October will be very busy (after the Europeans get back from vacation). Greece will be back in the headlines in October according to the WSJ: Troika to Spend 'All of September' in Greece -EU Official

"The mission in September will stay the whole month in order to report to the October Eurogroup," the official said, referring to the ministers' meeting scheduled to take place in Luxembourg on Oct. 8.

Here are a few key European dates:

• September 6th, Governing Council meeting of the European Central Bank in Frankfurt with a press conference to follow. ECB President Mario Draghi is expected to discuss how the ECB will help lower Spanish and Italian borrowing costs.

• September 12th, Germany's Constitutional Court is expected to rule on the new eurozone bailout fund and fiscal treaty.

• Mid-September: Euro-zone finance ministers' informal meetings in Nicosia.

• October 8th, Finance Ministers meeting in Luxembourg.

• European Council meeting, October 18th and 19th in Brussels.

And in the US:

• (Not key) Political conventions: Republicans August 27–30 in Tampa, and Democrats September 3–6 in Charlotte. The election is on November 6th.

• September 12th and 13th: the Federal Open Market Committee (FOMC) meets. After this meeting the FOMC will release updated Summary of Economic Projections, and Fed Chairman Ben Bernanke will hold a press conference. Major economic releases before the FOMC meeting: August 29th, second estimate of Q2 GDP, and September 7th, the August employment report.

Yesterday:
• Summary for Week Ending Aug 10th
• Schedule for Week of Aug 12th

by Calculated Risk on 8/12/2012 10:06:00 AM

The following graphs show the percent of loans delinquent by loan type based on the MBA National Delinquency Survey: Prime, Subprime, FHA and VA. First a table comparing the number of loans in Q2 2007 and Q2 2012 so readers can understand the shift in loan types.

Both the number of prime and subprime loans have declined over the last five years; the number of subprime loans is down by about 35%. Meanwhile the number of FHA loans has more than doubled and VA loans have increased sharply.

An interesting point: Each loan type improved in Q2 2012, but the total delinquency rate increased. The reason is the shift in loan types - from prime loans to more FHA and VA loans.

Note: There are about 42.5 million first-lien loans in the survey, and the MBA survey is about 88% of the total.

MBA National Delinquency Survey Loan Count
	Q2 2007	Q2 2012	Change	Q2 2012 Seriously Delinquent
Prime	33,916,830	30,120,941	-3,795,889	1,500,023
Subprime	6,204,535	4,031,216	-2,173,319	918,714
FHA	3,030,214	6,827,727	3,797,513	614,495
VA	1,096,450	1,526,913	430,463	70,696
Survey Total	44,248,029	42,506,797	-1,741,232	3,103,928

Click on graph for larger image.

First a repeat: This graph shows the percent of loans delinquent by days past due. Loans 30 days delinquent increased to 3.18% from 3.13% in Q1. This is at about 2007 levels and around the long term average.

Delinquent loans in the 60 day bucket increased to 1.22% in Q2, from 1.21% in Q1.

The 90 day bucket increased to 3.19% from 3.06%. This is still way above normal (around 0.8% would be normal according to the MBA).

The percent of loans in the foreclosure process decreased to 4.27% from 4.39% and is now at the lowest level since Q1 2010.

Note: Scale changes for each of the following graphs.

The second graph is for all prime loans.

This is the category with the most seriously delinquent loans. Back in early 2007 when Fed Chairman Ben Bernanke said "the problems in the subprime market seems likely to be contained", my former co-blogger Tanta responded "We are all subprime!" - she was correct.

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 has declined sharply.

This graph is for FHA loans. In Q2, there was a shift from 90+ days deliquent to in-foreclosure, but the overall percent of loans delinquent or in-foreclosure declined in Q2.

The improvement in late 2010 was a combination of the increase in number of loans (recent loans have lower delinquency rates) and 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.

The last graph is for VA loans. This is a fairly small but growing category (see table above).

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