Discussing mortgage delinquencies and foreclosures, what rising rates mean for first time home buyers and much more!
Mortgage Delinquencies Fall to 11 Year Low
Nationally, 4.3 percent of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in March 2018, representing a 0.1 percentage point decline in the overall delinquency rate, compared with March 2017 when it was 4.4 percent.
As of March 2018, the foreclosure inventory rate – which measures the share of mortgages in some stage of the foreclosure process – was 0.6 percent, down 0.2 percentage points from 0.8 percent in March 2017. Since August 2017, the foreclosure inventory rate has been steady at 0.6 percent, the lowest level since June 2007, when it was also 0.6 percent. The March 2018 foreclosure inventory rate was the lowest for that month in 11 years; it was also 0.6 percent in March 2007.
The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.9 percent in March 2018, down from 2.1 percent in March 2017. The March 2018 serious delinquency rate was the lowest for that month since 2007 when it was 1.5 percent.
Excellent new and so much better than the dark days after the economy and housing market hit the skids!
Frank Nothaft, CoreLogic’s chief economist, said:
Unemployment and lack of home equity are two factors that can lead to borrowers defaulting on their mortgages. Unemployment is at the lowest level in 18 years, and for the first quarter, the CoreLogic Equity Report revealed record levels of home equity growth with equity per owner up to $16,300 on average for the year ending March 2018.
I say that unemployment is the main cause of defaults. The number of people that defaulted due to being underwater on their homes is much much smaller.
They do find that defaults increase due to disasters such as hurricanes. The serious delinquency rate has quadrupled in Puerto Rico due to last years hurricane!
Rising Mortgage Rates and First Time Home Buyers
From First American:
Given the strong likelihood of rising mortgage rates in 2018, many savvy real estate market observers are curious how rising rates may impact demand, especially among millennial first-time home buyers.
Continued positive economic news and confidence that buyers will remain undeterred, even if rates exceed 5.5 percent, bode well for the real estate market in 2018.
On a national level, the title agents and real estate professionals surveyed believe that mortgage rates would need to hit 5.6 percent, 1.0 percentage point above the current rate, before first-time home buyers withdraw from the market.
It may be some time before rates hit 5.6% but it does appear that we will see higher rates in the coming year. I know we have heard this prediction for the past several years…
With the Fed raising their benchmark rate, this time it may actually happen!
Check out this chart showing the median age of first time home buyers according to data from the latest NAR Profile of Home Buyers and Sellers:
Interesting stuff and maybe this causes some of you to think about buying a home. Maybe you are reaching a point in your life that it is starting to make sense for you to own a home.
But you may be wondering if renting makes more sense. Well it might but you have to consider how rents are rising and how owning a home builds wealth.
Check out this chart showing rent increases from the Census Bureau’s Q1 2018 median rent data:
You can see that rents have been steadily increasing. But so are mortgage rates and home prices.
You must do some soul searching and honestly decide what is best for you…
Making your landlord rich or owning your home and building wealth?
FHFA Proposes GSE Capital Requirement Changes
The Federal Housing Finance Agency (FHFA) is seeking comments on a proposed regulation on capital requirements for Fannie Mae and Freddie Mac (the Enterprises). The proposed rule would implement a new framework for risk-based capital requirements and a revised minimum leverage capital requirement for the Enterprises.
FHFA Director Melvin L. Watt said:
We think it is important for FHFA, as the prudential regulator for Fannie Mae and Freddie Mac, to articulate our views on capital requirements and to start a healthy discussion about the amount of capital the Enterprises should have to appropriately shield taxpayers from assistance. In addition, feedback on this proposed rule will inform FHFA’s views as conservator in making possible refinements to our assumptions about capital as we evaluate the Enterprises’ business decisions during conservatorship.
OK but what are they actually proposing?
Well first, they are not taking a position on housing finance reform. Which is a serious issue that does need addressing but no on wants to take it on…
The changes they are proposing would not take effect while the GSEs are in conservatorship. The FHFA’s proposal is asking for comment on two different minimum leverage ratio requirements for the GSEs.
Under one option, the GSEs would have to hold capital equal to 2.5% of assets and off-balance-sheet guarantees. The second method would require Fannie and Freddie’s capital to be equal to 1.5% of trust assets and 4% of nontrust assets.
Right now, the GSEs can keep a $3 Billion capital buffer and these proposed increases might help to eases concerns about the solvency of the GSEs. Without meaningful changes to the GSEs, the taxpayers could still be left holding the bag IF something goes wrong…
Step One for Skynet Is Destroying the Economy?
From Zero Hedge:
About 240 years and numerous industrial revolutions from the first, America could be on the verge of a new age of automation, one controlled by Silicon Valley robots and artificial intelligence.
In fact, automation could destroy as many as 73 million U.S. low skilled, low wage laborers by 2030, a recent report by McKinsey Global Institute stated.
The dire prediction that robots could take a bulk of the middle-class jobs — has led many of macro strategists to believe that significant economic disruptions are coming to America.
To sum up, the coming jobs apocalypse driven by debt, demographics, and automation could displace tens of millions of bottom-tier jobs. In return, this transition could trigger significant economic disruptions, which could only accelerate into the 2020s. The magnitude of today’s workforce shift is expected to match that of the automation of agriculture from 1900 to 1940. The automation of farming transformed America’s economy and severely disrupted labor markets, ultimately climaxing into the Great Depression and subsequent world war.
Please do not think this is only going to be low-skill jobs. The first jobs to be eliminated will be the low skill ones but in the future, almost all jobs could be performed by robots.
You can prepare now or watch as the world leaves you far behind…
The Real Economic Numbers
Every time the mainstream media touts some “wonderful new economic numbers” I just want to cringe. Yes, it is true that the economic numbers have gotten slightly better since Donald Trump entered the White House, but the rosy economic picture that the mainstream media is constantly painting for all of us is completely absurd. As you are about to see, if honest numbers were being used all of our major economic numbers would be absolutely terrible.
Just as I often said while Obama was in office, the government doesn’t want the real numbers released since it could lead to social unrest. Things are better for many in some ways since the darkest days f the Great Recession but things still are not as good as they need to be.
This article uses data from Shadow Stats that is very different from the numbers we hear from the main stream media:
- April 2018 unemployment was 21.5%
- Inflation is actually 6% if you calculate it how it was done back in the 1990’s
- Inflation is actually 10% if you calculate it how it was done back in the 1980’s
- GDP is in the negative and we are still be in a recession
There is no doubt that things are much better than they were. But with the way that measurements for important economic numbers are being manipulated, it is hard to say what is really happening.
Those that support the current Administration will always see thing s differently from those that do not. The key thing is for you to realize that things are rarely as they appear…
And it is even more rare for things to be exactly as they are reported…
Who Benefits from the “Booming Economy”?
Although the U.S. mass media are awash with stories about America’s “booming economy,” the benefits are distributed very unequally, when they are distributed at all.
Buoyed by soaring corporate profits and stock prices, the richest Americans have reached new and dazzling heights of prosperity. As of May 2018, the growing crop of billionaires included corporate owners with unprecedented levels of wealth like Jeff Bezos ($112 billion), Bill Gates ($90 billion), and Warren Buffet ($84 billion). Some families have also grown fantastically rich, including the rightwing Koch brothers ($120 billion) and the Walton family, owners of Walmart (nearly $175 billion). Together with the rest of America’s richest 1 percent, they possess nearly 40 percent of the nation’s wealth.
But a great many Americans are not doing nearly as well as the nation’s super-wealthy. That 40 percent of the wealth, in fact, constitutes twice the total wealth held by the bottom 90 percent of the American public (about 294,000,000 people).
Sadly, America is becoming the land of opportunity for only a select few. This is why you must do everything you can to make progress everyday to live the life you dream of and deserve.
I am not saying it will be easy or happen overnight. If it helps, I’m pulling for you!
The Basis For Killing Network Neutrality Is Bogus
When the nation’s top telecommunications regulator decided to do away with the widely popular “network neutrality” rules that governed the Internet, his justification was that the regulations were slowing deployment.
But a new analysis by the Center for Public Integrity plus other factors cited by industry experts show that reasoning to be shallow at best and ridiculous at worst.
Most pointedly, while wireline deployment did slow while network neutrality rules were in place, it was due to at least one reason that had nothing to do with regulation: carriers were running out of potential customers, according to a Center analysis of Census and FCC data.
Eliminating the Net Neutrality rules will not be good for consumers or the internet. It will be great for big business and their websites but websites like mine will be hurt by this.
The innovations from the internet will become increasingly difficult to achieve. Only when these innovations can be used or controlled by the rich and powerful will we see anything new.
Only when the rich and powerful can control and profit from something internet related will it be allowed to flourish.
Well that is it for today!