6,373,000
According to Lender Processing Services (LPS)
That is an insanely large number. I never would have guessed a number this high. This is not good news heading into the traditionally slow house sales period of winter months. Of this insanely large number, 2,172,000 are foreclosure pre-sale inventory (ready to flood the market). Of the remaining 4,202,000 that are more than 30 days delinquent, 1,844,000 are more than 90 days delinquent. The Case Shiller 20 city home price index for August is due out tomorrow. It will be interesting to see what has happened since the economic slowdown began this summer.
Meanwhile, federal regulators are rolling out an "upgrade" to the government's Home Affordable Refinance Program (HARP). The goal is to allow underwater homeowners that are current on their mortgage payments to refinance at lower interest rates. Many homeowners that are current on their mortgage payments cannot refinance because they would have to put more money into the deal to create enough equity to refinance and that is not possible.
The new HARP will waive appraisal requirements and other fees that increase closing costs to make refinancing more affordable as well. HARP will allow homeowners to refinance regardless of how far their values have fallen. It is estimated that 1.6 million refinancings will take place by 2013 if the restrictions are relaxed.
Some think that this will be a shot of adrenaline for the economy. I agree that some people that refinance will have more disposable income after refinancing, but aren't we going through a deleveraging process? Aren't people refinancing into 15 year mortgages from 30 year mortgages to take advantage of the low rates and interest savings? Aren't saving rates rising and revolving debt falling?
Given the large 6,373,000 number above, representing the homeowners that are not eligible for HARP, I don't see anything approaching a panacea in this approach. I think the reason behind HARP is to prevent strategic default. The regulators know that once a homeowner's loan balance is 120% of the house value, default rates rise, even if the homeowner can afford the payments. They are hoping that if they help the people that are current on their homes they will stem the tide of foreclosures.
According to Lender Processing Services (LPS)
That is an insanely large number. I never would have guessed a number this high. This is not good news heading into the traditionally slow house sales period of winter months. Of this insanely large number, 2,172,000 are foreclosure pre-sale inventory (ready to flood the market). Of the remaining 4,202,000 that are more than 30 days delinquent, 1,844,000 are more than 90 days delinquent. The Case Shiller 20 city home price index for August is due out tomorrow. It will be interesting to see what has happened since the economic slowdown began this summer.
Meanwhile, federal regulators are rolling out an "upgrade" to the government's Home Affordable Refinance Program (HARP). The goal is to allow underwater homeowners that are current on their mortgage payments to refinance at lower interest rates. Many homeowners that are current on their mortgage payments cannot refinance because they would have to put more money into the deal to create enough equity to refinance and that is not possible.
The new HARP will waive appraisal requirements and other fees that increase closing costs to make refinancing more affordable as well. HARP will allow homeowners to refinance regardless of how far their values have fallen. It is estimated that 1.6 million refinancings will take place by 2013 if the restrictions are relaxed.
Some think that this will be a shot of adrenaline for the economy. I agree that some people that refinance will have more disposable income after refinancing, but aren't we going through a deleveraging process? Aren't people refinancing into 15 year mortgages from 30 year mortgages to take advantage of the low rates and interest savings? Aren't saving rates rising and revolving debt falling?
Given the large 6,373,000 number above, representing the homeowners that are not eligible for HARP, I don't see anything approaching a panacea in this approach. I think the reason behind HARP is to prevent strategic default. The regulators know that once a homeowner's loan balance is 120% of the house value, default rates rise, even if the homeowner can afford the payments. They are hoping that if they help the people that are current on their homes they will stem the tide of foreclosures.
