Magazine article Mortgage Banking

Past-Due Home Loans Could Hit 18 Percent in 2010

Magazine article Mortgage Banking

Past-Due Home Loans Could Hit 18 Percent in 2010

Article excerpt

A New York-based specialty research firm that follows bank and financial stocks released its mortgage finance Outlook for 2010, and it predicts the percentage of home loans in delinquency or foreclosure could potentially reach 18 percent this year. Keefe, Bruyette & Woods (KBW) also predicts residential production volume will fail to $1.6 trillion in 2010, mainly driven by declining refinance activity.

KBW predicts housing sales "will pick up moderately in the spring of 2010, [but] we expect purchase activity to taper off later in the year after the expiration of the housing tax credit in April 2010." On the commercial real estate side, KBW expects "very limited origination volume."

The rise in the percentage of loans in delinquency or foreclosure will be driven by "the weak economy, increased foreclosure activity and an increase in delinquencies in the FHA book of business as that book seasons," the report said. KBW noted that it expects a similar increase in commercial mortgage delinquencies.

The financial services research firm said it was expecting flat home prices in 2010. KBW said it expects that strong housing affordability, and a modest economic recovery will be offset by a still-high level of foreclosures and the expiration of the $8,000 home purchase tax credit at the end of April 2010. …

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