The housing market continues to take one foot forward and one backward, despite some signs that housing may be reaching a bottom, out comes a report that foreclosure activity in this year’s first quarter was the highest on record. More than 616,000 homes were hit with foreclosures actions. Mortgage delinquencies also hit record highs, with 9.12% of all mortgages being late. For the first time since the rapid growth of subprime lending, prime fixed rate loans now represent the largest share of new foreclosures. This news comes despite the lowest mortgage rates on record, now with the recent spike in rates higher expect these numbers to worsen further. Countrywide Financial Corp (now Bank of America Home Loans) bid to dismiss a class action suit accusing it of steering borrowers into risky mortgages for profit reasons was dismissed by a Federal Judge. The judge also denied Countrywide’s motion to strike state claims. The list of problem banks now tops 300, which is it’s highest level in 15 years. The assets that this group of banks control is $220 billion. This year so far, 36 banks have failed. On average, just 13% of the banks on the FDIC’s (Federal Deposit Insurance Corp) problem list fail. In the event of a failure, individual accounts are insured by the FDIC up to $250,000. In the commercial real estate market there is a huge supply of commercial loans coming due for refinancing that may place a greater strain on the banking industry. Bank leading in this market is down 30% from its peak in 2007. There were $221 billion Commercial mortgage backed securities (CMBS) sold two years ago, none have been issued this year. The market involves the packaging of loans into bundles sold to investors.
Sun, Jun 7, 2009
General