Market Studies

The national unemployment rate edged up in June to 9.2 percent, as the economy added just 18,000 jobs. The numbers were worse than market forecasts. Economists were expecting the rate to remain unchanged at 9.1 percent and job gains to be between 85,000 and 100,000. Declines in the labor market have added significantly to the volume of seriously delinquent mortgages. On Thursday, the administration announced that it was extending the mortgage forbearance period to 12 months for unemployed homeowners in government programs.

Data released by Clear Capital Friday show home prices at the national level posted their first quarterly gain in June after nine months of declines. The company says the 0.9 percent increase is an encouraging sign that the markets are capable of positive price growth despite continued economic and foreclosure pressures. But even with the second-quarter uptick, U.S. home prices lost 3.2 percent during the first half of 2011, and Clear Capital is forecasting another 2.4 percent drop for the second half of the year.

After changing little over the past month, both long- and short-term mortgage rates rose this week, with some loan products increasing in the range of 10 basis points. The 30-year fixed rate averaged 4.60 percent, while the 15-year fixed came in at 3.75 percent. Adjustable-rate mortgage also headed higher. Freddie Mac explained that mortgage rates followed Treasury yields higher this week, but the company says borrowing costs remain quite affordable by historical standards.

For the first time since the credit crisis began in 2008, the delinquency rate on loans held in commercial mortgage-backed securities (CMBS) has fallen for two consecutive months. After a modest reduction in May, the research firm Trepp LLC says the delinquency rate fell 23 basis points in June to 9.37 percent. Unfortunately, the company says, the rate reduction was driven primarily by a sharp spike in loans being resolved with losses, rather than delinquent loans actually curing.

Private mortgage insurers had more new notices of default to contend with during the month of May than they had loan cures. It was the first time in four months that defaults outnumbered cures. Mortgage Insurance Companies of America (MICA) says its five members reported 44,853 defaults and 36,159 cures in May. Private mortgage insurers help loan originators and investors make mortgage funds available to homebuyers who have less than 20 percent for a down payment.

Law enforcement officials say fraudsters and con artists see opportunity in turmoil, and right now, arguably the most tumultuous economic sector is housing. In its first year, the Financial Fraud Enforcement Task Force more than doubled the number of defendants charged with mortgage fraud. Mortgage fraud punishments followed the same trend, with nearly twice as many prison sentences of more than two years. But task force members say it's not enough, especially when the economy hasn't fully recovered.

Conditions across multiple financial sectors suggest economic stabilization and growth. It's the housing market that's holding back economic recovery, according to the credit bureau Equifax. The company's latest analysis of national credit trends points to shadow inventory and REOs as major mortgage market depressors. Growth in these areas has led to bigger write-offs. Equifax says write-off dollars for home finance in 2010 more than doubled that of 2006 and 2007 combined.

Reverse mortgage businesses accounted for a bigger share of industry casualties during the first half of 2011. Data released Tuesday shows that three lenders, which together made up 46 percent of the market for FHA's reverse mortgage program, called it quits earlier this year. The study noted that one factor impacting the dwindling sector is the possibility that borrowers will miss insurance or tax payments, which can trigger default on federally insured loans.

According to the Warren Group, a Boston-based real estate data firm, foreclosure activity in Massachusetts dropped year-over-year in May, which marked the fewest number of deeds recorded in any month so far this year. Foreclosure deeds, which represent completed foreclosures, decreased almost 65 percent from a year earlier. Foreclosure petitions, which mark the first step in the foreclosure process, dropped almost 67 percent.

For the fourth week in a row, 30-year fixed mortgage rates held steady at just above 4.5 percent, according to Freddie Mac's Primary Mortgage Market Survey, released Thursday. Freddie Mac calculates average interest rates based on data from about 125 lenders across the country. The 15-year rate remained unchanged from last week while the 5-year adjustable-rate mortgage dropped to a new record low.