Magazine article Mortgage Banking

Delinquency, Foreclosure Risk to Extend into 2009

Magazine article Mortgage Banking

Delinquency, Foreclosure Risk to Extend into 2009

Article excerpt

Look for a heightened sense of risk in the residential mortgage markets to extend into 2009 due to the ongoing conversion of loan delinquencies into foreclosures, as well as flat or declining house-price appreciation, according to a survey released by First American CoreLogic, Santa Ana, California.

CoreLogic's Core Mortgage Risk Monitor[TM] (CMRM) noted that its risk index for the fourth quarter of 2007 increased by 1.6 percent from the third quarter.

Although foreclosures are rising and house-price appreciation is flat on a national level, factors at the local level determine risk, according to CoreLogic Chief Economist Mark Fleming.

"There are markets experiencing the negative cumulative effects of rising foreclosure rates, pressures created by adjustable-rate payment reset terms, and fundamental economic factors such as loss of wage income, that explain the majority of mortgage risk," said Fleming.

"The geographic concentration of mortgage risk continues to be primarily driven by economic labor markets, with house-price volatility, and fraud and foreclosure trends having a secondary effect. Because many markets remain economically robust, the impact of these secondary effects are muted by the economy as a whole."

The CMRM measures the relative risk of residential mortgage loan delinquencies due to fraud propensity, collateral risk, house-price dynamics and local economic health in 381 metro areas representing 89 percent of the U.S. population, according to CoreLogic.

While house-price appreciation nationally remains moderately positive, many markets are in decline. …

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