Thursday, February 16, 2012

New York Foreclosures Inversely Proportional to Delinquencies

Saw an article this week on New York State foreclosure and delinquency rates. The gist is that delinquency rates of loans (that means loans that are 30 days or more behind) have fallen as a proportion of all mortgage loans in New York State. Foreclosures, however, have risen during the same time. 

That may sound ominous but for the projections mentioned in this article regarding New York City Foreclosure and delinquency rates published in October 2011.  To recap, the article states that actual foreclosures in New York City (where the property goes to auction and is sold or taken by the bank) fell by 69% in third quarter 2011. However, experts cited a virtual moratorium on actual foreclosures forced by scrutiny and fallout from the robo-signing debacle. This earlier article states that the number of loans 90 days late was the same as in previous quarters in October 2011.

So, between the October 2011 article and this week's article... PROGRESS! It was predicted in October that a spate of mortgages currently in default (90 days late) would move through the foreclosure process, thus raising the number of foreclosures from the abnormally low number achieved in the 3rd quarter. So according to February's article, that happened. Foreclosures rose.

BUT, according to the February article, the number of delinquent loans fell. (Delinquent loans are loans that are 30 days or more late; this includes loans considered 90 days late which were previously defined as "in default").   30-day late loans fell as a proportion from 8.12% of outstanding loans to 7.98%. So, maybe New York State is starting to work its way through the housing crisis.

.14% of loans may not sound like much (and indeed may be somewhat accounted for by the number of loans that finally were foreclosed and therefore removed from the loan pool). So clearly New York has a long way to go. But every little bit helps. The February article puts the current levels of delinquency and foreclosures in historical perspective (5% of total loans go delinquent and .5% go to foreclosure), as well as national perspective (New York ranks 26th out of 50 in total delinquencies - right on the median). 

With the stock market, as a leading indicator, having been mostly positive from early 2010 through now, it follows that the real estate market would start to improve as a traditional trailing indicator. "Stopping the bleeding" in New York is one of the first steps.  It's nice to see some progress back from the brink.