Magazine article Economic Trends

Foreclosures in Ohio

Magazine article Economic Trends

Foreclosures in Ohio

Article excerpt

10.21.10

The number of new foreclosures across the United States ticked up mildly in the first and second quarters of 2010, according to the Mortgage Bankers Association's National Delinquency Survey. Nationally, 1.17 percent of all outstanding loans went into foreclosure in the second quarter (April-June), a figure unchanged from the first quarter but down from 1.47 percent a year ago. All in all, 4.57 percent of all mortgages in the U.S. are currently in foreclosure. The decrease in the number of loans entering foreclosure over the past year was predominantly driven by a decline in problem adjustable rate mortgages (ARMs) of all major loan types, particularly subprime (high-risk) loans.

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When the housing bust was just setting in back in 2006, Ohio's foreclosure rate was the highest of any state in the nation (3.38 percent) and about three times as high as the national average (then 1.19 percent). Now--four years later--Ohio has the sixth highest percentage, with 4.82 percent of all mortgage loans in foreclosure, and the national average has nearly caught up. What hasn't changed, however, is that Ohio still easily leads the other states in the Fourth District (Kentucky, Pennsylvania, and West Virginia) in foreclosure rates.

Foreclosures are correlated with delinquencies, or loans past due, but not perfectly. This is because not all delinquencies wind up as foreclosures. With 10.3 percent of all loans past due, Ohio has the eleventh highest delinquency percentage of all U.S. states, as of the second quarter of 2010. This marks a slight drop from the series' first-quarter peak of 10.5 percent but an increase from 10.3 percent a year earlier.

In the mid-1990s, Ohio had a smaller percentage of loans past due relative to the U.S. as a whole and most of the other states in the Fourth District. Currently, however, the percentage of delinquent loans in Ohio is higher than in any other Fourth District state. It is interesting to note, though, that while most states' foreclosure rates tend to follow a similar trajectory as their delinquency rates, West Virginia has done fairly well at bucking this trend. West Virginia's delinquency rate has risen side-by-side with Ohio's since 2006, soundly above other District states, and yet its foreclosure rate sits considerably below the group. This is mainly because West Virginia is a nonjudicial-foreclosure state. As a result, foreclosed properties move more easily, relatively, from "foreclosed" to "real estate owned" status, that is, when the property is owned by the lender. …

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