In late August, the Mortgage Bankers Association sent up their version of a red flag. The non-seasonally adjusted mortgage delinquency rate increased 64 basis points from 8.22% in the first quarter of 2009 to 8.86% at the end of the second quarter 2009. The delinquency rate includes mortgage loans that are at least one payment past due. The delinquency rate does not include those loans that are already immersed in the foreclosure process.
The percentage of loans in the foreclosure process at the end of the second quarter 2009 was 4.3%. This figure represents an increase of 45 basis points from the first quarter 2009. The year-over-year increase is a stunning 155 basis points. The combined delinquency rate and foreclosure actions now stand at 13.16% on a non-seasonally adjusted basis. This is the highest rate in the history of the Mortgage Bankers Association. Wow! 13.6% of all mortgage loans are not performing. Savvy real estate investors are doing something about it.
The current trends have expanded the scope of mortgage failures. The bulk of failures were originally attributed to sub-prime mortgage failures. Much of the current upswing is attributed to prime mortgages. Actually, the rate is higher than this report suggests. Earlier in the year, some states initiated programs to forestall the foreclosure process. Information from these states does not factor in the current tallies.
Real Estate investors are reaping rewards from these dismal numbers. The number of short sales and foreclosed properties purchased in bulk by investors highlights the opportunities the current market is providing real estate investors. Banks are anxious to turn properties over and do not want to carry and maintain residential properties.
Real estate investors should connect with a real estate agent and have the agent approach lenders who are faced with heavy foreclosures. Banks will make it hard to say no if they have a qualified purchaser for vacant properties or properties that will become vacant. Some real estate agents report that purchases are taking place at 10-20% of appraised value. In today’s real estate market, opportunity is knocking. Are you listening?