Dear Subscriber,So, let's wait and see. On the delinquency rate, I found the following over at MarketWatch.com:
The government has just told us that the official U.S. unemployment rate surged to 9.4%, the worst in a quarter century!
Now, here’s what the government has NOT told us:
** This official number is grossly understated: It doesn’t even begin to count the millions who suddenly find themselves trying to live on a part-time income ... or the millions more who have given up looking for a job altogether.
** The worst layoffs are yet to come: Not only from giants like Chrysler and General Motors ... not only from thousands of auto dealerships and part suppliers ... but also from millions of small businesses all across America.
** The government’s recent bank "stress" tests were flat out wrong. They assumed an average employment rate of 8.9% this year. With today’s announcement, it is now clear, beyond a shadow of a doubt, that the actual rate will be far higher.
** The unemployment rate is CLOSELY correlated with the delinquency rate on mortgages. That means it’s now virtually INEVITABLE that mortgage defaults and foreclosures will surge FAR more.
According to the MBA's quarterly National Delinquency Survey, 1.37% of mortgages entered the foreclosure process in the first quarter, up from 1.08% in the fourth quarter.
Total foreclosure inventory was also up, with 3.85% of all mortgages somewhere in the foreclosure process at the end of the first quarter, compared with 3.3% in the fourth quarter -- also a record jump. The delinquency rate, which includes loans that are at least one payment past due but not those in foreclosure, was a seasonally adjusted 9.12%, up from 7.88% in the fourth quarter.
The Washington-based MBA survey covers 45 million mortgages, representing between 80% and 85% of all first-lien residential mortgages outstanding in the United States.