San Diego Strategic Default

With banks refusing to help homeowners with their underwater mortgages, a New York Times story advocates simply walking away. August 2011 the Mortgage Banker’s Association National Delinquent Survey indicates the delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 8.44 percent of all loans outstanding as of the end of the second quarter of 2011. This is an increase of 12 basis points from the first quarter of 2011, and a decrease of 141 basis points from one year ago.

“While overall mortgage delinquencies increased only slightly between the first and second quarters of this year, it is clear that the downward trend we saw through most of 2010 has stopped. Mortgage delinquencies are no longer improving and are now showing some signs of worsening,” said Jay Brinkmann, MBA’s Chief Economist. “The good news is the continued decline in long-term delinquencies, those mortgages that are three payments or more past due. The bad news is that drop is offset by an increase in newly delinquent loans one payment past due.”

Brinkmann continued, “Mortgage loans that are one payment, or 30 days, past due are very much driven by changes in the labor market, and the increase in these delinquencies clearly reflects the deterioration we saw in the labor market during the second quarter. Weekly first-time claims for unemployment insurance started the quarter at 385,000 but finished the quarter at 432,000. The unemployment rate started the quarter at 8.8 percent but climbed to 9.2 percent by the end of the quarter.”

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