Delinquency rates on prime mortgages, the least risky category, more than doubled in the first quarter from a year earlier, according to statistics released yesterday by the government.
- Prime mortgages 60 days or more past due climbed to 2.9 per cent of such loans through March 31. At the same point last year, 60 day deliquencies were just 1.1 per cent of all prime loans.
- Two thirds of all mortgages in the US are prime mortgages, so any percentage increase in deliquencies represents a huge absolute number of deliquent mortgages.
- So here are the absolute numbers: 661,914 prime mortgages were at least 60 days delinquent in the first quarter, a jump from 250,986 a year earlier.
- Delinquency is a predictor of foreclosure in the future. And with house prices still falling–nationally, they’re now down 30% from the peak–the recovery rates will be far lower and losses by lenders far steeper.
- Prime mortgage deliquencies are now accelerating at a faster rate than any other residential mortgage loan category, faster than subprime and faster than Alt-A. (Of course, that’s because these other categories have already fallen so far that prime is just now catching up.)
Also, the attempts to modify mortgages to keep people in their homes isn’t working out so well.
- Redefault rates are near 50% after Fannie/Freddie loan modifications. Of course Fannie and Freddie can grant bigger loan mods (and probably will), but taxpayers will have to eat the cost.
- Private loan modifications are redefaulting at a 58.1% rate 12 months after modification.
The best reaction to this dire news came from the brilliant investment advisor and blogger Michael Shedlock: “Can those people redeafulting can afford ANY payment? Even if they can the incentives to walk away are enormous.”
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