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The “Hope Now” effect - some preliminary mortgage data

I received a note this morning suggesting that while the actual effect the “teaser freezer” program may have on the foreclosure problem is still up in the air, at least now there’s some data coming out to work with. The numbers are preliminary, and highlights are as follows:

• There are 80 million homes, and approximately 49.6 million mortgages. The average mortgage size is roughly $202,000.
• Roughly 63% of mortgages are fixed “prime” loans, and 14.5% are adjustable rate “prime” loans. “Below prime,” 6.3% are fixed rate, 6.8% are adjustable rate, and around 9.3% are FHA/VA loans.
• Of the roughly 6.5 million “below prime” loans, over half have some kind of teaser rate. Of that amount, roughly 1.8 million are adjustable rate loans with resets beginning in 2008 and 2009. 2/3’s of that amount may qualify for help - the remainder, or around 600k, will have to fend for themselves.
• Help is equally divided between rate freezes and streamlined refinancing assistance, and data suggests that around half of the refis may qualify for some FHA or VA loan.
• Of mortgagees, roughly 2.6 million are delinquent today - how many of them have missed only one payment in the last year and/or are adjustable rate borrowers with resets within the Hope Now “window” is unclear. And there are just under one million borrowers in some level of foreclosure as we speak.

ADDITIONAL NOTE: I’ve never made hay about the subprime borrowers, seeing them simply as the high yield tranche that always rears its head when money is easy to come by. As the data above suggests, they are only a small part of the overall mortgage picture, and credit risk was already built in. It’s the 7.2 million prime ARMs, many beginning their resets the first of next year, that people should be worried about.

Tagged: data, Hope Now, mortgages, subprime

Original post by Michael Gracie