Diary

Remember how TheOne was going to fix the housing market?

There have been a bunch of govvie programs that were supposed to help people who were in danger of losing their homes to foreclosure. Let’s see how they’re working.

HOPE for Homeowners, launched 10/1/08. Allows eligible borrowers to refi into an FHA loan and requires principle reductions on the loan. So far, they’ve refi’d 94 loans. But it’s only been a year.

Home Affordable Modification Program, launched 3/1/09. $75B from TARP to provide modifications for homeowners in default. So far, they’ve helped 1,174 borrowers.

That’s just two of the programs but none are doing any better.

Oh, and things are going to get substantially worse in the housing market and with banks over the next 12 months. Third quarter FDIC numbers will be out shortly and compiled by the end of Nov. It’s going to be really ugly. I’ll have a diary out in early December on the housing/mortgage market after the numbers are available. Here’s a snapshot from the second quarter that’s going to get substantially worse with the third quarter numbers:

1-4 Family Mortgages:

Servicer Total $$ Portfolio 90+ Day Default $$ 90+ Day Default %
Wells Fargo

$235.5B

$22.9B

9.7%

JP Morgan/Chase

$161.4B

$13.4B

8.3%

The critical thing here is that 90+ day defaults cure at a fairly low rate, typically less than 50% and currently in California they are curing at less than 10%. In other words, those homes are headed for the bank’s inventory.

The numbers will get substantially worse through this time next year.
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see Bank Loan Performance for a comprehensive look at second quarter numbers. I would recommend having alcohol handy.