Thursday, February 18, 2010

Shocking number

I read the trans union report on mortgage delinquencies and ran across a shocking number in it (actually there were a lot of them).

What percentage of mortgages in Riverside county are at least 60 days behind on their payments? a) 6.2% b) 8.6% c) 12.8% d) 18.5%

Answer d, 18.5% Nearly 1 in 5 homes are at least 60 days late. WOW!!

Riverside’s 18.5% delinquency rate was 6 percentage points higher than the 12.5% recorded in the fourth quarter of 2009. In San Bernardino, the rate increased from 11.2% to 17.2% year over year, TransUnion said. California as a whole went from 6.9% to 11% year over year; Los Angeles County jumped from 6.8% to 11.4%; and Orange County rose from 5.3% to 8.9%.


Neudi said...

Report have it broken down by zip? I'd be interested in 92880/92883.

The Yen Guy said...

It's not that surprising to me, as you wrote in your December 9th article '55% Underwater': "I found this chart at Dr Housingbubble. It looks like nearly 55% of the mortgages in the IE are underwater. Most of them WAY WAY underwater!"

Given that ... people simply are not making mortgage payments, resulting in the huge percentages of delinquencies you report today.

I believe the issue hss a number of causes:
1) Flippers came in the market driving up prices.
2) People bought often with no money down -- getting 100% financing, through toxic lenders.
3) The use of stated income mortgages -- the subprime loans, the Alt-A loans, and the Option Arm loans from a whole host of lenders such as Washington Mutual, Ditech, Wachovia, Bank of American, GMAC, and many many others. People simply "stated" the income necessary to buy a home; they must have been including their lottery and casino earnings and their auntie's income; the income was never ever checked by the lender.
4) Soaring unemployment.

What really concerns me is the revenue situation for local municipalities and the state as well: as people walk away, property tax payments will go unpaid. There will come a day soon when a person can buy a home simply for past due taxes.

Proposition 13 was a real disaster; California needed a more balanced tax system, that is taxes from a number of sources, but P13 skewed things badly.

As municipalities and the state find revenue shortfalls, they will declare bankruptcy.

Tyrone said...

I agree with Yen Guy.

Not surprising or shocking at all. We're still in the early stages of the debt/wealth destruction. Big question is whether or not the government will "save" all the debt losses.

THIS would be shocking, but not entirely surprising...
...hyperinflation is the process of saving debt at all costs, even buying it outright for cash.

Got Gold?

theY said...

Yes, I'm hearing anecdotes about some mid/upper communities in Riverside where people have just figured out it's best to walk. Apparently there are a number of people who bought into those lawyer commercials that say they will "handle" your mod. The problem is many of these people don't qualify at all. They can afford the payment, but are more concerned with having a savings than a nice house. It sounds like the sht is in the air and on it's way to the fan.

golfer_X said...

The whole mode issue just chaps my ass. It's totally a scam to keep people paying so the banks can keep making money. The poor suckers that sign up for the mods (and actually qualify for one) are trading a few years in a house for their future. In 5 years when most of the mods reset those people will be screwed. Or lets say they want to move. What then, yea they got a nice low payment but the loan balance is still double the homes value. I just see mods as the next foreclosure crisis.

Tyrone said...

This might be another upcoming crisis...
U.S. State Pension Gap Over $1 Trillion

Question is, will the government save this debt, too?

FairEconomist said...

The pension shortfalls will be ignored and kicked down the road. That can be ignored until the cash position turns negative, which is generally a decade or more away.

Terry said...

To the Yen Guy

Wouldn't taxes be paid when the property is transferred back to the bank from the person that defaulted on the mortgage. I am sure that the county would not make any transfers until they get paid so the government continues to get their monies regarding taxes. Their may be some delays in the taxes but they are getting them.

Anonymous said...

$1.5 Billion for California, Nevada and Arizona.

More intervention, more problems.

Anonymous said...

here is the link:

Neudi said...

This has nothing to do with helping anyone and all about an election year. Democrats will get pounded at the polls this year, actually anyone that is currently in office should in my opinion. We need a complete cleansing of this nonsense.

They still don't understand that they need to get out of the saving business for a correction to occur. Home value declines, especially in California, are a good thing.

Anonymous said...

good point Neudi. we'll probably see intervention until elections then? next year might be better time to buy?

to buy or not to buy that is the question.

i lived in Michigan for 3 years and recently moved out here. Michigan didn't have a housing boom like California but the high unemployment numbers busted the housing market. i have to keep reminding myself of what happened to prices in Michigan due to unemployment will probably happen here.

we saw houses in prime neighborhoods lose 30% of value just from unemployment! And this was in West Michigan not Detroit/ Big 3's backyard.
2 hours away people were affected. of course Detroit has seen much worse devaluations.
i just wonder how much unemployment numbers will bring down prices here.

in Michigan there was ZERO intervention for falling prices, i would know since we sold our house at a loss. the only help we got was since our home depreciated in value we didn't have to pay a state or county transfer tax. which was something i discovered on my own, realtors had no idea what i was talking about. saved me $1400 bucks! ended up selling my house myself in two months in one of the worst markets in the USA and moved back to California.

golfer_X said...

Here's a little light reading for you.

Neudi said...


Awesome read.


Can't give you advice on when to buy. I'm on the fence myself, at least I was until prices here in Eastvale started to move upwards. I'm renting now; however, own properties back in the old Midwest. I'll stay on that fence until prices are on par with rents in this area. I rent a fairly large house from some poor sucker that purchased in back in 2004. He is probably out of pocket 5-600 per month from what I pay him. Might get it back in taxes but who knows.

Not sure what are you are looking at. My wife likes this Eastvale area because its convenient and close to the highways. Prices are creeping up, personally I think its temporary. Who knows, the fed could always conjure up yet another fantasy to stabilize prices. I'm with X, I think the mods are the next bust. A vast majority of the homes in my area all got purchased between 2003-7. My guess is almost everyone of those homes will cycle onto the market over the next couple years. If you look at google realestate, realtytrac, etc this area is lit up with defaults.

Neudi said...


The only thing I'll add is that a purchase should be based on affordability and your ability to pay. There are standard calculations out there on income to loan. Go conservative. Lots of posers here in Eastvale that signed loans at 4/5 times or more income, got a 80k ride in the driveway and don't have two nickels to rub together.