
Slicing and Dicing the New Foreclosure Numbers
[Jul 16, 2009.]
The headline reads: "Foreclosure Filings Up 15 Percent to Record High."
But the headline is not the entirety of the story. Many other foreclosure numbers confirm, deny, or mix the message of that headline, and could hold significance for the homeowner looking to refinance or home buyers looking to purchase.
Here are a few important facts and figures to keep an eye on while evaluating current refinance options or new home purchase options.
Prime Mortgages More Problematic Than Subprime
One of the more notable and perhaps troubling statistics is the report by the Mortage Bankers Association that 28 percent of the new foreclosure filings are related to so-called "prime" mortgages--the biggest percentage of any particular type of loan.
This indicates that while the crisis may have began with borrowers with bad credit, unverifiable income, or some other more or less obvious risk, the crisis has now affected even the cream of the crop as far as credit and income is concerned.
It's likely that high unemployment and underwater home values are driving this continuing development.
Refinance Now or Forever Hold that ARM?
Another piece of actionable intelligence can be found in the fact that three quarters of all payment-option adjustable rate mortgages are due to reset by the end of 2011. According to this report from Bloomberg news, 540,000 ARMS will reset during the busiest reset month, August of 2011.
What if interest rates go up between now and then?
What if property values go up?
Great questions. The timing of a refinance is of the essence. Borrowers with adjustable rate mortgages are wise to put in a refinance application early, and then work with a trustworthy refinance professional to choose the best window to refinance into a low fixed rate mortgage.
California and Florida In Trouble, But Still Nice Places to Live
California had the greatest total of new foreclosure filings with 391,611. Florida came in second place at 268,064, a 42 percent increase year over year. California's unemployment rate of nearly 12 percent is particularly troubling.
However, it's important to realize that amidst this slew of bad news, California and Florida still remain highly desirable locales in which to own a home. While this factor is not reflected in any number, one only needs to visit such places to see why they garner so many visitors who end up making these states their homes.
In that sense, the intangibles--weather, lifestyle, the beach--may signal a rebound in property prices before any numbers confirm that such a rebound is happening. New home buyers may want to be especially aware of the impact of non-number-based data on home prices.
About Author:
Andrew Freiburghouse is a writer and businessman. He has worked as a magazine reporter, tax preparer, screenwriter, copywriter, and loan officer. He graduated from Santa Clara University in 1999 with a B.A. in English. Andrew was born and raised in the City of Los Angeles.
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