Market Studies

Delinquency rates were mixed in the second quarter for commercial and multifamily mortgage investor groups, according to the Mortgage Bankers Association (MBA). The delinquency rate for loans held in commercial mortgage-backed securities (CMBS) is the highest it's been since MBA began tracking the sector in 1997. Delinquency rates for other groups, on the other hand - such as Fannie Mae and Freddie Mac - remain below levels seen in the early 1990s, some by large margins.

Following a sharp drop in the months immediately after the homebuyer tax credit expired, the National Association of Realtors' gauge for future sales of previously owned homes has risen. NAR reported Thursday that its Pending Home Sales Index, based on contracts signed in July, increased 5.2 percent from last month's reading. The month-to-month jump was an unexpected development, and some analysts say it may be a sign that the post-tax credit lull in home sales will soon come to an end.

Massachusetts foreclosure deeds increased nearly 80 percent in July from the same month in 2009, according to a new study by the Boston-based research firm the Warren Group. However, foreclosure petitions, the first step in the foreclosure process in Massachusetts, decreased more than 20 percent. The Bay State is on track to outpace foreclosure activity from the past two years. Already completed foreclosures year-to-date are 60 percent above the tally during the same period of 2009.

There seems to be no bottom in sight for mortgage rates. Already at their lowest level in a half-century, they dropped to new record lows again this week. Analysts say we have the weak economy to thank, but that same trigger is also thwarting what would be the ideal upshot - enticing would-be buyers to put a dent in the ballooned housing supply. Freddie Mac reports 30-year mortgages are now averaging 4.32 percent; 15-year rates have dropped to 3.83 percent. Bankrate says the larger jumbo 30-year fixed rate fell to a new low of 5.17 percent.

In the first quarter of 2010, state housing finance agencies' (HFAs) delinquencies declined for the first time since overall performance of loans began to deteriorate in the second quarter of 2008, according to Standard & Poor's. But the agency's analysts say the slowdown could be only temporary. S&P's study shows delinquency rates for HFA loans remain high relative to a year ago. However, the percentage of HFA loans at least 60 days past due or in foreclosure decreased to 6.05 percent in Q1, down from 6.57 percent in the fourth quarter of 2009.

The industry has completed 1.13 million permanent loan modifications for at-risk homeowners so far in 2010, according to data released Wednesday by HOPE NOW. The organization also reports that since January of this year, mortgage delinquencies of 60 days or more past due have dropped 20 percent, but the data supports the assumption that the decline is simply the byproduct of an increase in foreclosures. July's foreclosure starts outpaced loan mods during the month by nearly 90 percent.

Mortgage interest rates have dropped to their lowest level in decades, and even with tight credit conditions, more borrowers are beginning to take advantage. The Mortgage Bankers Association (MBA) reported Wednesday that its index measuring mortgage loan application volume increased 2.7 percent for the week ending August 27, 2010, after interest rates dropped yet again. Refinance activity was up 2.8 percent, while home purchase applications rose 1.8 percent.

Home prices rose in June for the third consecutive month - a precipitate of the homebuyer tax credit that sparked a flurry of purchase activity in the spring. Buyer demand, though, has now dropped off substantially, and it's a trend that will likely rob the market of the recent rebound in home prices. According to the S&P/Case-Shiller index released Tuesday, home prices rose 1.0 percent in June compared to May. While June itself was positive, growth rates have already decelerated in 14 of the 20 metros included in S&P's study.

U.S. consumers are less satisfied with their experience during the loan modification process than they are during loan origination, namely because mortgage servicers are missing the mark when it comes to delivering on best practices, according to J.D. Power and Associates. The company's survey found that mortgage servicers fail to adhere to a time frame for approval, don't provide the customer with status updates, and repeatedly ask borrowers for the same information. BB&T ranks highest in customer satisfaction among mortgage servicers.

Moody's Investors Service says it expects home price appreciation to be ""soft"" for the next couple of years. The company says there were 1.8 million more vacant homes sitting on the market than what is considered the norm at the end of the second quarter, reflecting a rise in the number of homes that lenders are repossessing. According to Moody's, it will not be until 2012 that demand and supply conditions are balanced enough to drive price appreciation that matches the pace of inflation.