Friday, September 14, 2007

The Truth. What the Media Doesn't Tell Us About The Mortgate Industry

The Sanborn Team is trying to keep you posted on the Mortgage Industry. While there are many articles telling you that the sky is falling... here are some statistics that you will find interesting.
Delinquencies vs. Notice of Default vs. Foreclosures


Delinquencies cover any missed payment - even if it is just for one month, it is reported as a delinquency.
  1. The delinquency rate on sub-prime loans was running 13.77%, which is up from 13.44% from the previous year. In the last quarter, the delinquency rate dropped to 12.4%.

  2. The delinquency rate on Alt-A loans is only 2.69%, while prime loans are at 2.57%.

  3. Combining the three rates with the loan volume gives you a delinquency rate for all loans in the U.S. of only 4.84%. The record low is 4.00%.

  4. California's delinquency rate is only 3.25%.

Notices of Default

Notices of Default are filed when lenders' loans have been delinquent for a specific period of time. These loans begin the foreclosure process. The four states that have the largest number of loans in foreclosure are California, Florida, Nevada and Arizona. Yet, in the 1st quarter, 24 states saw a decline in foreclosure starts and 36 states saw a decline in the 2nd quarter!

  1. Only 3.23% of all sub prime loans have entered the foreclosure process, with the most defaults occurring on loans from January 2005 to January 2006.

  2. Only 1.28% of all prime loans have entered the foreclosure process

  3. In California, the last quarter saw 53,943 notices filed, with most filings on loans originated from the summer of 2005 to the summer of 2006.

  4. The lowest number was 12,417 in the 3rd Quarter of 2004.


Foreclosures occur when the buyer has been unsuccessful in curing the debt, and either a lender or an investor has acquired the property. As of the last month, there was 1 foreclosure filing for every 693 homes in America.

  1. For sub-prime loans, 68% of the buyers are able to prevent the foreclosure by either refinancing the property or successfully selling their home.

  2. For prime loans, the foreclosure rate is .86%. Last year, the U.S. saw a combined foreclosure rate of only 1.09% while California's rate was 1.17%.

  3. California now ranks #4 in the nation in foreclosure - down from #1!!!

The media will try to scare you with numbers like $1 trillion in loans needs to be recast for this year and that foreclosures could cost lenders as must as $2.3 billion! They never mention that there is $10.4 trillion of mortgages with $56 trillion of equity in American households. Add to that the wealth of the U.S. at $70 trillion, with the value of stocks between $15 and $20 trillion, while the bond market is even larger. So these losses (should they occur) should not have any great effect on home prices.

Please feel free to contact us directly at 310-777-2858 or visit our website at

Provided by the Mortgage Brokers Association, Federal Reserve & the Federal Bureau of Investigation.