A short sale is when banks agree to let borrowers sell their homes for a reduced price if they owe more than it’s worth.
The number of homeowners who missed at least one payment on their mortgage surged to a record in the first quarter of the year. More than 10% of homeowners had missed at least one mortgage payment in the January-March period, the Mortgage Bankers Association said Wednesday. That number was up from 9.5% in the fourth quarter of last year and 9.1% a year earlier.
Those figures are adjusted for seasonal factors. For example, heating bills and holiday expenses tend to push up mortgage delinquencies near the end of the year. Many of those borrowers become current on their loans again by spring.
Without adjusting for seasonal factors, the delinquency numbers dropped, as they normally do from the winter to spring.
More than 4.6% of homeowners were in foreclosure, also a record. But that number, which is not adjusted for seasonal factors, was up only slightly from the end of last year.
Jay Brinkmann, the trade group’s chief economist, said the foreclosure crisis appears to have stabilized. Seasonal adjustments may be exaggerating the change from the previous quarter, he added.
“I don’t see signs now that it’s getting worse, but it’s going to take a while,” he said. “A bad situation that’s not getting worse is still bad.”
Economic woes, such as unemployment or reduced income, are the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit. But homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures.
Those borrowers made up nearly 37% of new foreclosures in the first quarter of the year, up from 29% a year earlier.
The risky subprime adjustable-rate loans that kicked off the foreclosure crisis are making up a smaller share of new foreclosures. They made up 14% of new foreclosures in the January-March period, down from 27% a year earlier.
Via USA Today