Mortgage Delinquencies Dip

According to the Mortgage Bankers Association, mortgage delinquencies--those borrowers one payment late--dropped slightly between the third and fourth quarters of 2009, from 9.64 percent to 9.47 percent.

February 22, 2010
By Dees Stribling, Contributing Editor

Courtesy Flickr Creative Commons user kevindooley

According to the Mortgage Bankers Association, mortgage delinquencies–those borrowers one payment late–dropped slightly between the third and fourth quarters of 2009, from 9.64 percent to 9.47 percent. The MBA also noted that such a fourth quarter decline is quite rare, even in much better times, since winter and the holidays bring with them extra expenses even for beleaguered homeowners.

Jay Brinkmann, the organization’s chief economist, issued an optimistic statement regarding the delinquency downtick: “We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007,” he noted. “With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink once the rate at which these problems are resolved exceeds the rate at which new problems come in.”

Still, delinquencies nationwide are still a lot higher than in 4Q08, when the rate was 7.88 percent. The delinquency pain is also concentrated in the places one might expect: among Florida homeowners, for example, 26 percent are one or more payments late; in Nevada, that figure is 24.7 percent.

Inflation a Nonstarter

The U.S. Department of Labor reported on Friday that “core” consumer prices — excluding food and energy, as if one could — dropped 0.1 percent last month. Add food and energy, and prices were up 0.2 percent, but those tricky consumer categories are generally considered too volatile to be good guides to long-term inflation trends.

The core inflation drop was the first time that has happened since 1982, when the economy was similarly in a crummy funk. This time around, a 0.5 percent drop in the cost of shelter — in housing prices and the costs of owning a home; apartment rent; and hotel/motel room rates — was a major component in the overall drop.

Hotels and motels in particular have had to cut prices, not only during January, but for quite a while now. According to a report by PricewaterhouseCoopers L.L.C., U.S. hospitality properties slashed their room rates by nearly 9 percent in 2009 and are predicted to cut them more in 2010, about 2.1 percent.

GGP Shareholder Sues

The Simon Properties-General Growth Properties soap opera continued at the end of last week, as a GGP shareholder named James Young filed suit in Cook County Circuit Court against the company, accusing it of neglecting its fiduciary duty by turning up its nose at Simon’s $10 billion buyout offer.

News of the suit came after Simon told GGP in yet another public letter that the bankrupt REIT’s terms for a nondisclosure agreement with Simon “make clear your apparent interest in precluding our offer from moving forward or being considered by your stakeholders.”

Wall Street saw a middling sort of day on Friday, the the Dow Jones Industrial Average up a scant 9.45 points, or 0.09 percent, while the S&P 500 eked out a 0.22 percent gain and the Nasdaq was likewise practically flat, gaining 0.1 percent.