Market Studies

Freddie Mac's report on mortgage interest rates this week says long-term 30-year rates rose slightly, while 15-year rates eased and short-term adjustable-rate mortgages set new lows. A separate study from Bankrate claims mortgage interest rates dropped across the board to record lows. On Wednesday, the Federal Reserve announced another injection of $600 billion into the nation's sluggish economy, but it remains to be seen if this is enough to push Treasury yields and mortgage rates lower, and if so, by how much.

Consumer default rates declined in September across certain structured finance categories, including first- and second-lien mortgages, according to a report issued Thursday by Standard & Poor's. The improvements, which S&P's data shows have continued since last year, came despite a national unemployment rate that is still near its recession peak. The agency's analysts explained that job growth typically lags an economic recovery, and noted tighter underwriting standards are having a positive effect.

Commercial and multifamily mortgage loan originations during the third quarter jumped 15 percent from the previous quarter and were 32 percent higher than during the same period last year, according to data released by the Mortgage Bankers Association (MBA) Thursday. Origination volumes for Fannie Mae, Freddie Mac, and life insurance companies were relatively strong, MBA says, but commercial mortgage borrowing at banks fell on both a quarter-over-quarter and year-over-year basis.

Overall mortgage application volume decreased 5 percent for the week ending October 29, the Mortgage Bankers Association (MBA) reported Wednesday. The decline was led by a falloff in refinances, however, applications for home purchases increased during the week. The trade group reported that mortgage rates were mixed, with 30-year contract rates heading up, but 15-year rates declining.

Market data collected by Lender Processing Services (LPS) during the month of September reveals that foreclosure timelines continue to increase, with borrowers in the latest stages of foreclosure languishing without having made a mortgage payment for up to 16 months. LPS notes that the average time a loan remains delinquent in judicial states such as New York and Florida now exceeds 500 days. Nationwide, more than 4.3 million loans are currently 90 or more days delinquent or in foreclosure, according to LPS.

The nation's homeownership rate held steady at 66.9 percent during the third quarter. With foreclosures still mounting, bank repossessions at an all-time high, and many consumers abandoning the idea of the ""American Dream,"" homeownership is at its lowest mark since the end of 1999. Renting is not only gaining ground as the most practical means of housing for a larger number of consumers, but some say it could be the answer to keeping millions of struggling borrowers in their homes and stabilizing foreclosure-ridden communities.

The number of consumers rolling their delinquency status on mortgage payments from 30 to 60 days past due and 60 to 90 days past due peaked in July 2009, according to a new study from TransUnion. It's interesting to note that the National Bureau of Economic Research has declared the end of the nation's latest recession to be June 2009, one month before the roll-rate crest. TransUnion says although we may have left the worst of the recession behind, from a credit perspective we were just hitting the toughest period for consumer default.

Fitch Ratings puts the industry's shadow inventory - meaning loans that are seriously delinquent, in foreclosure, or REO - at 7 million homes. The agency says based on recent liquidation trends, it will take more than 40 months to clear this distressed inventory. While the volume of newly delinquent mortgages has begun to improve, liquidation rates have been constrained by weak demand and initiatives to modify loans. On top of that, Fitch says the recent discovery of defects in the foreclosure process is prolonging the housing correction.

The percentage of home loans 90 or more days past due held by the nation's two largest mortgage companies has declined yet again. Both Fannie Mae and Freddie Mac have reported a steady drop in their single-family delinquency rates since February of this year. According to the latest figures from Fannie, its serious delinquency rate fell to 4.70 percent in August. Freddie's dropped to 3.80 percent at the end of September. Movement in the two GSEs' multifamily delinquency rates was mixed.

Mortgage servicers have completed 1.4 million permanent loan modifications so far this year, according to the latest estimates from HOPE NOW. Servicers have been granting permanent loan modifications through proprietary and HAMP programs at a steady pace of about 150,000 per month. But consumer advocates and federal watchdogs say their efforts are unfortunately overshadowed by the sheer volume of delinquencies. HOPE NOW says there are still over three million homeowners at least two months behind on their mortgage payments.