This afternoon's news included the most recent quarterly survey from the Mortgage Bankers Association which shows:
A record number of homeowners entered foreclosure at the end of last year and more are making late mortgage payments, especially those with high-risk, sub-prime and government-financed loans...
...4.95% of average mortgage loans had late payments, compared to 4.67% the previous quarter and 4.7% a year before. It was the worst showing since spring 2003.
The fraction of mortgages entering foreclosure during the fourth quarter of 2006 climbed to 0.54%, the highest since the association started reporting in 1972. The previous high of 0.50% occurred in the second quarter of 2002 as the country was recovering from a recession....
...Late payments for FHA loans reached a historical high of 13.46% during the fourth quarter last year, up from 12.8% the previous quarter and 13.18% a year before.
And things continue to unravel in the "sub prime" market. In one report:
A board member at battered subprime lender New Century Financial Corp. (NEWC.PK: Quote, Profile , Research) last month sold $2.75 million worth of stock amid a 36 percent plunge in the company's share price, U.S. regulatory filings show.
The director, Michael Sachs, said he was not aware the shares were being sold until after the Feb. 8 transaction was completed, according to a filing with the Securities and Exchange Commission. Since then, lenders have stopped providing funding to New Century, pushing the company toward bankruptcy.
The Feb. 8 sale of 140,000 New Century shares on Sachs' behalf happened on the day after the subprime lender said it found accounting problems and would restate financial results....
The New York Stock Exchange on Monday suspended trading in New Century shares.
Another mortgage lender also publicly announced its troubles, . Accredited Home Lenders, "once considered by analysts as one of the strongest of the sub-prime lenders," now needs to raise serious cash to satisfy
its Wall Street partners [who] have required it to supply $190 million in new capital this year in return for continuing to provide funds for it to lend.
Accredited said it no longer meets the net income requirement its lenders have demanded and can offer no assurance that they will continue to support it. The firm has been struggling to digest its purchase last year of Los Angeles-based sub-prime lender Aames Investment Corp. and has said it may need to record some unexpected expenses as a result of that deal.
Yesterday, Bloomberg reported that:
Mortgage defaults may climb to $225 billion over the next two years compared with about $40 billion annually in 2005 and 2006, according to debt strategists at Lehman Brothers Holdings Inc.
Another Bloomberg report offered up the troubling possibility that:
As many as 1.5 million more Americans may lose their homes, another 100,000 people in housing-related industries could be fired, and an estimated 100 additional subprime mortgage companies that lend money to people with bad or limited credit may go under, according to realtors, economists, analysts and a Federal Reserve governor. Financial stocks also could extend their declines over mortgage default worries.
...
Subprime lenders Ameriquest Mortgage Co. in Irvine, California; Ownit Mortgage Solutions LLC and WMC Mortgage Corp., a subsidiary of General Electric Co., in Woodland Hills, California; Mortgage Lenders Network USA Inc. in Middletown, Connecticut and Fremont General Corp. together have fired more than 5,600 workers in the past year.
...
New Century Financial Corp., the second-largest subprime lender, said today it ran out of cash to pay back creditors who are demanding their money now. The Irvine, California-based company has lost 90 percent of its market value this year and stopped making new subprime loans, prompting speculation it will seek bankruptcy protection. New Century already has cut 300 jobs and its 7,000 remaining employees are waiting to see if the company will survive.
...
Doug Duncan, chief economist of the Washington-based Mortgage Bankers Association, predicted in January that more than 100 home lenders may fail this year.
...
Job Cuts
By the end of this year, job cuts at companies including Benton Harbor, Michigan-based Whirlpool Corp., Masco Corp. of Taylor, Michigan, and St. Louis-based Emerson Electric Co. may exceed the fallout from the 1991 housing slump, said Paul Puryear, managing director at St. Petersburg, Florida-based Raymond James & Associates. The Bureau of Labor Statistics doesn't give data for housing-related job losses.
...
Fraud `Pervasive and Growing'
The Federal Bureau of Investigation says mortgage fraud is "pervasive and growing" and the incidence of such fraud has almost doubled in the past three years.
Last in this parade of actual and potential miseries, three days ago the NY Times reported in a large headline that "Troubles Hit Real Estate at High End." The NYT story includes the info that:
Until now, deep-pocketed Wall Street tycoons and foreign investors benefiting from a weak dollar seemed to be holding up the luxury real estate market even as the low-end fractured. But there are signs that some high-end real estate developers are also being hit by the slowdown.
How's that for bad, worse, and worst news?
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