U.S. Home Foreclosures UP 68% last month... Or NOT?
Saint paul, Minnesota. December 2007: Home owners increasingly failed to keep up with their mortgage payments in November, as the number of foreclosure filings APPEARED to increase a whopping 68% compared with November 2006 according to Realty-Trac, Inc.
October 2007 filings had fallen 10% from Oct 2006 numbers, and August to September 2007 was down 8% from the same period in 2006.
If you look at November 2007 numbers, this works out to allegedly be 1 in 617 households in foreclosure.
You may notice I keep saying appear and allegedly? This is because as usual, one must look a bit deeper into quick disastrous doom and gloom sound bites from the media.
The filings report numbers include all default notices, auction sale notices, and bank repossessions.
But, a huge portion of these defaults are from people who took out mortgages in 2004, 2005, and 2006. These also correlate to a huge up-tick in 80/20 type loans. While I haven't been able to find exact numbers, I can tell you from my day to day loan originations that the vast majority of those people got two loans in order to purchase their home.
There is also statistical data of people overwhelmed by the HELOC (Home Equity Line Of Credit) they took out to pay credit cards, cars, vacations, and more. Many of these people previously were in good loan-to-value positions, but took out the equity loan up to 100% of the homes value. The big surge in equity loans was also in 2003 - 2006.
If you are defaulting on your first mortgage, your most likely defaulting on your second mortgage (or third for that matter). The numbers provided by Realty-Trac fail to compensate for that fact, and only make a small mention that some people may receive more than once notice if they have multiple mortgages.
So is it really 1 in 617 homes, or something significantly less?
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