This morning, newspapers had interesting, somewhat-contradicting data about American mortgages.
First, home sales have gone up 10 percent in October, probably as a result of the $8,000 tax credit. The tax credit has had the same effect as the cash for clunkers program. It lured some buyers to a purchase for fear of an expiring credit. The net effect was to bunch sales that started during the summer into an October closing date.
However, things are still looking grim. The Washington Post reports that roughly 14 percent of borrowers have troubles with their mortgage:
About 9.6 percent of borrowers were delinquent on their mortgage during the third quarter, according to the survey, and another 4.5 percent more were somewhere in the foreclosure process. Overall, about 14 percent of mortgage loans or 7.4 million households were delinquent or in the foreclosure process during the quarter, according to the group.
Also, the Wall Street Journal reports that new data released by First American CoreLogic show that 23 percent of residential properties with mortgages, or 10.7 million homeowners, were underwater in the third quarter of 2009. The article notes that “even recent bargain hunters have been hit: 11% of borrowers who took out mortgages in 2009 already owe more than their home’s value.” According to CoreLogic, homeowners in Nevada, Arizona, Florida, and California are highly likely to have large negative mortgage equity.
My two cents is that the increase in underwater homeowners and the number of foreclosures is not at its peak and will keep growing. So no housing rcovery yet.