Thursday, April 23, 2009

Fannie/Freddie defaults soar

As I think we've seen throughout the commentary from the banks over the past few weeks, that much of the slowdown in mortgage delinquencies and foreclosures that occurred from Dec - Feb was tied to a wave voluntary moves by banks and states to delay foreclosures. When those moratoriums expired foreclosures have rebounded sharply. However, data out of Fannie Mae and Freddie Mac shows that even during the periods of foreclosure abatement delinquencies have soared.

"Fannie Mae and Freddie Mac mortgage delinquencies among the most creditworthy homeowners rose 50 percent in a month as borrowers said drops in income or too much debt caused them to fall behind, according to data from federal regulators.

The number of so-called prime borrowers at least 60 days behind on mortgages owned or guaranteed by the companies rose to 743,686 in January, from 497,131 in December, and is almost double the total for October, the Federal Housing Finance Agency said in a report to Congress today. "

This chart shows the sharp uptick in notices of default which are issued when a borrower falls 90-120 days behind. Borrowers are facing both stagnate (or falling) wages and sharply higher unemployment. Both of these factors are preventing any meaningful shift in the trend which remains negative for housing. Any headlines to the contrary are just white noise....

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