Foreclosure Freakonomics. How can foreclosures slow and delinquencies rise simultaneously? The answer lies in the nature of unemployment

Posted by Donny Mak on Tuesday, November 8th, 2011 at 1:00am.

Foreclosure Freakenomics
By: Alan Aptheker 
The number of delinquent mortgage borrowers that missed one to three payments climbed in the first half of the 2011, according to the Mortgage Bankers Association  (MBA).
However, foreclosures have slowed, because the number of loans that are delinquent more than 90 days has declined. hence, more borrowers are paying late for a shorter period of time, and getting back on track with their payments within a three month period.
Why is this happening?  It's a result of cash poor homeowners getting hit with a one time, unexpected medical bill, or the non-existent holiday bonus or annual raise that simply did not come. Maybe a temporary cut in work hours is to blame. The MBA found that mortgage loans that are one payment, or 30 days past due are very much driven by these hiccups in consumers' lives, much of them employment-related. 
On the whole, foreclosures are back to 2007 levels, which means that from the 60,000 feet view of the market, more creative borrowers are finding a wider variety of ways to keep their homes. They're getting current more quickly: second jobs, family loans?  We're not sure. But in the next six months or so, we'll see a surge of refinancing due to the Obama Refinancing Plan for underwater homeowners.  Many many mortgage payments will be lower. Less late payers. It's a convergence of activities that could have us feeling a twinge of excitement  in 2012, or at least earlier in 2013 than we once thought.   

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