Mortgages in Foreclosure, Delinquency Rates Rise in First Quarter

The percentage of loans in the foreclosure process at the end of the first quarter rose to 2.47% of all mortgages outstanding on one-to-four-unit properties, up from 2.04% in the fourth quarter, according to the MBA's National Delinquency Survey.  Loans entering the foreclosure process rose to .99% from .83% in the fourth quarter.  6.35% of all loans were at least one payment past due in the first quarter, up from 5.82% in the fourth quarter.  According to the report, California, Florida, Arizona and Nevada drove the increases representing 62% of the foreclosures started on prime ARM loans in the first quarter and 49% of the foreclosure starts on subprime ARMs.  About 20 states experienced drops in the number of foreclosures starts.  Michigan, Ohio and Indiana who led the charge in foreclosure filings recently saw an encouraging drop in foreclosure starts in the first quarter.  This may be an indication that a bottom has been reached in some of these states.  In Detroit, for example, you can literally buy a house for $1, or, if you are a professional flipper and you're still in business, some banks will pay you thousands of dollars to take foreclosed properties off their hands.  So, yes, I'd call that a bottom.  In California, on the other hand, where median home prices are still significantly higher than overall US medians, and inventories of unsold homes continue to rise, prices should continue to fall until buyers begin to view them as cheap.  They may be more affordable than they were a year ago, but they aren't cheap yet.  In Florida, Arizona, and Nevada, the inventory of unsold condos will take many years to work off, signaling a continuing rise in foreclosure activity.  When I can buy a condo in Miami for $1, we can start talking about a bottom.