Drop in Repo Homes Mortgage Default Rate in April
Repo homes mortgage default rates took a slight drop last April, prompting industry experts to hope that the housing market deterioration is slowing down.
According to data released by the Mortgage Insurance Companies of America (MICA), the insured repo homes mortgage default rates last April drop to a six-month low, with 81,171 insured homeowners no more than 60 days delayed on payments. A two-month late payment is usually an indication of distressed properties.
The April figures were 3 percent down from the previous month and 24 percent below from a record high of 106,482 in January. Meanwhile, insured mortgage defaults increased 10 percent from the April 2008 total.
In 2008, regulators and politicians encouraged major home loan providers in the country to offer mortgage loan modification programs to help troubled borrowers remain in their homes and avoid foreclosures.
Lenders are willing to work out with troubled borrowers to make their account current because it would be more costly for them to foreclose on a property. Industry experts have attributed the slight drop in repo homes mortgage default rates to these loan modification and refinancing programs.
Mortgage consulting firm Glaser Group President Howard Glaser said any decline in default rate is significant, adding that the combination of low refinancing rates and aggressive loan modification plans have been a great help in allowing people remain in their homes by avoiding foreclosures.
Meanwhile, loans that were made current in April totaled 58,587, representing a decline of 16 percent from March, the month when some lenders lifted moratoriums on repossessed homes.
Insured private mortgages allow borrowers to purchase houses with less than 20 percent down payment. Private mortgages provide a guarantee that lenders will be paid even if homeowners default. Data released by MICA showed that in April, the total insurance in force reached $932 billion.
On the other hand, data from the Mortgage Bankers Association showed that an estimated 12 percent homeowners who have mortgage loans ended the first three months of this year with either delayed payments or facing foreclosures.
The increasing number of repo homes pressured prices of properties to go down which left many homeowners with negative equity. Single-family home prices declined by 19.1 percent in the first three months of this year, the biggest slide in the 21-year history of the S&P/Case-Shiller Home Price Indices.
