Over 15% of Option ARM Mortgages Seriously Delinquent

According to this Office of the Comptroller of the Currency Office of Thrift Supervision news release, OCC and OTS Release Mortgage Metrics Report for Second Quarter 2009, in the 2nd quarter of 2009 15.2% of the 900,000+ Payment Option Adjustable Rate Mortgages (Option ARM's) were seriously delinquent and 10% were in the process of foreclosure. Both of these figures are approximately triple the rates for all mortgages. The release defined Option ARM Mortgages as mortgages which "allow borrowers to choose from a variety of payment options each month, including payments that reduce principal, cover interest only, or result in unpaid interest being added to the balance of the loan, resulting in an increased amount owed."

Other important points covered in the release regarding default rates and foreclosures are:

• The percentage of current and performing mortgages fell by 1.4 percent to 88.6 percent of the 34 million loans in the portfolios of reporting servicers.
• Economic factors continued to adversely affect credit quality, with delinquencies up across all risk categories—prime, Alt-A, and subprime. The percentage of serious delinquencies increased to 5.3 percent of all loans in the portfolio.
• Although delinquencies rose, the number of new foreclosure actions remained about the same as in the previous quarter. Total foreclosures in process continued to grow and reached 993,000 mortgages, or about 2.9 percent of the portfolio.

All I have to say is "wow".  This is really bad.  There is no way the real estate market is in any stage of recovery at this point in time.  There will continue to be high levels of foreclosures and short sales for the next few years.

If you are a homeowner in Middle Tennessee who has one of these Option ARM Mortgages and your home is worth less than the amount(s) you owe, please contact me to discuss selling your home via a short sale.  I am a Middle Tennessee short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN

You can find out more information about me via my website JimTheRealEstateExpert.com and my Active Rain profile Jim McCormack's Active Rain Profile - Short Sale REALTOR and Real Estate Expert.

Over 50% of Modified Loans in Default

According to this Office of the Comptroller of the Currency Office of Thrift Supervision news release, OCC and OTS Release Mortgage Metrics Report for Second Quarter 2009, when evaluated after 9 months over 50% of modified loans are 60 or more days past due. The news release doesn't actually say this.  You need to read the supporting documentation, OCC and OTS Mortgage Metrics Report, to see the grim statistics.

Modified Loan Performance (from the OCC and OTS Mortgage Metrics Report)

As shown in Table 3 below, the percentage of loans that were 60 or more days delinquent or in the process of foreclosure rose steadily in the months subsequent to modification for all vintages for which data were available. Modifications made in third quarter 2008 showed the highest percentage of modifications that were 60 or more days past due following the modification. Modifications made during fourth quarter 2008 and first quarter 2009 performed better in the first three to six months after the modification than those made in the third quarter 2008.

As shown in Table 4 below, Loan Modifications on loans held in the servicers’ own portfolios continued to perform better than on loans serviced for others. This difference may be attributable to differences in modification programs and the servicers’ flexibility to modify loan terms to achieve greater affordability and sustainability.

As you can see as more time passes the percentage of homeowners who stop paying their modified loans increases across the board.  The reasons are that loan modifications cannot help you if you lose your job, or have a home that is worth far less than the mortgage balance(s).

If you are a homeowner who is having a hard time paying your mortgage you should try a loan modification first even though it is a low probability proposition and over 50% fail.  At least a loan modification will buy you some time and help you in the short term if you can get approved.  I would be glad to provide you with some FREE help so that you can increase your chances of obtaining a loan modification.  If you live in the following areas, please contact me as I can help you solve your real estate problems since I am a Middle Tennessee short sale, pre-foreclosure (preforeclosure) and foreclosure expert and REALTOR.

• Rutherford County Tennessee: Murfreesboro TN, Smyrna TN and La Vergne TN (LaVergne TN)
• Williamson County Tennessee: Brentwood TN and Franklin TN
• Davidson County Tennessee: Nashville TN and Belle Meade TN