TRENDS IN DELINQUENCIES AND FORECLOSURES IN IDAHO

Transcription

1 TRENDS IN DELINQUENCIES AND FORECLOSURES IN IDAHO February 2009 Craig Nolte, Community Development Department, Federal Reserve Bank of San Francisco

2 Outline of Presentation National Trends Rising foreclosures House price declines Rising unemployment Idaho Trends in foreclosure Housing market softening Rising unemployment Scale of loan modifications still falls short of need

3 National Trends

4 National Trends Foreclosures rose steadily in 2008, with wide repercussions for US economy A slight decline in the national foreclosure rate in the 3 rd Quarter of 2008 Factors driving foreclosures nationally House price declines Rising unemployment, coupled with turmoil in financial and credit markets, may further influence foreclosure rate going forward

5 Percent of All Loans After Steady Rise, National Foreclosure Starts Dipped Slightly in 3 rd Quarter of National Foreclosure Starts (Percent of all loans) Source: Mortgage Bankers Association, National Delinquency Survey, 3 rd Q 2008

6 Nationally, House Prices Continue to Decline 200 Case-Shiller National House Price Index (2000 = 100, quarterly) Source: Case - Shiller Home Price Index, 3 rd Q 2008

7 Recession Marks Significant Jump in National Unemployment Insurance Claims 0.50 National Unemployment Insurance Claims, Percent Change Year-over-Year Source: Haver Analytics and FRBSF Calculations, annual percent change, 2000 Q Q3

8 Idaho Trends

9 Foreclosure Starts (Percent of All Loans) Foreclosures in Idaho Have Risen Significantly, But Remain Below US Average Alaska Washington Oregon Hawaii Utah Idaho US California Arizona Nevada 3Q Q Q Q 2008 Source: Mortgage Bankers Association, National Delinquency Survey, 3 rd Q 2008

10 Foreclosure Starts (Percent of Loans) Yet Unlike National Trends, Idaho Saw an Increase in Foreclosure Starts in 3 rd Quarter Idaho Foreclosure Starts (Percent of All Loans) Source: Mortgage Bankers Association, National Delinquency Survey, 3 rd Q 2008

11 FHFA House Price Index 2000=100 Idaho Seeing Softening of Real Estate Market 190 FHFA House Price Index (formerly OFHEO) (2000=100, quarterly) Idaho United States Source: Federal Housing Finance Agency (formerly OFHEO), 3 rd Quarter 2008

12 FHFA House Price Index 2000=100 Among Metropolitan Areas, Boise Experiencing Greatest Declines in House Values 220 FHFA (formerly OFHEO) House Price Index (2000 = 100) 200 Coeur D Alene 180 Boise 160 Idaho Falls 140 Pocatello Source: Federal Housing Finance Agency (formerly OFHEO), 3 rd Quarter 2008

13 Percent of Foreclosure Starts Idaho s Foreclosures are Concentrated in Subprime ARM Market 6.0 Foreclosure Starts by Loan Type Prime Fixed Prime ARM Subprime Fixed Subprime ARM Source: Mortgage Bankers Association, National Delinquency Survey, 3 rd Q 2008

14 Nearly 1 in 5 Loans during Subprime Boom in Idaho Was a High Cost Loan 35% Percent of All Borrowers with High Interest Conventional Loans, % 25% 22.7% 23.1% 23.6% 24.3% 25.9% 27.3% 28.0% 28.1% 29.2% 20% 20.4% 15% 10% 5% 0% Hawaii Alaska Oregon Washington Idaho California USA Arizona Utah Nevada Source: Home Mortgage Disclosure Act Data, 2005

15 High Cost Lending in Idaho More Prevalent Among Some Minority Groups 45% High Cost Conventional Loans by Race, % 35% 30% 25% 20% 15% 10% 5% 0% All borrowers Asian/Pacific Islander borrowers White borrowers Native American borrowers Black borrowers Hispanic/Latino borrowers Source: Home Mortgage Disclosure Act Data, 2005

16 Unemployment Rate Unemployment Rate in Idaho Has Risen Sharply 8.0 Unemployment Rate United States Idaho Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Source: Bureau of Labor Statistics, December 2008

17 Employment Trends by Industry in Idaho Total Employed (thousands) Percent Change Idaho Dec-08 1-mo.* 3-mo.* 12-mo. Total Trade, Transportation & Utilities Government Professional & Business Svcs Educational & Health Srvs Leisure & Hospitality Manufacturing Construction Financial Activities Other Services Information Natural Resources & Mining Source: Bureau of Labor Statistics, December 2008, *Annualized

18 Idaho Foreclosure Data Maps

19 Idaho Data Maps Distribution of Lending Volumes September 2007 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, September 2007

20 Idaho Data Maps Areas Affected by Concentrated Foreclosures September 2007 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, September 2007

21 Idaho Data Maps Areas Affected by Concentrated Foreclosures April 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, April 2008

22 Idaho Data Maps Areas Affected by Concentrated Foreclosures November 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, November 2008

23 Idaho Data Maps Areas with Concentrations of REO Properties November 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, November 2008

24 Idaho Data Maps Areas at Risk of Additional Foreclosures November 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, November 2008

25 Number (Adjusted for Hope Now Servicers) Loan Modifications as Share of Loan Workouts Have Increased 2000 Idaho Loan Workouts Q Q Q Q Q Repayment Plans Loan Modifications Source: Hope Now Alliance Servicing Data, 3 rd Quarter 2008

26 Number (Adjusted for Hope Now Servicers) Yet, Workouts Still Fall Short of Need 8,000 Foreclosure & Delinquencies v. Loan Workouts in Idaho 3rd Quarter ,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Serious Delinquencies Foreclosure Starts Foreclosure Sales Repayment Plans Loan Modifications Source: Hope Now Alliance Servicing Data, 3 rd Quarter 2008

27 Conclusions

28 Conclusions Multi-pronged strategy is needed to stem foreclosure crisis Continued foreclosure prevention efforts are critical Foreclosure Prevention: Borrower Outreach, Refinance and Loan Modification (including principal reduction) Reaching these borrowers now may help to prevent unnecessary foreclosures Encourage borrowers to contact the Hope Hotline by calling (888) 995-HOPE or visiting

29 Conclusions Other strategies that can help to mitigate the negative impacts of foreclosure on families and neighborhoods Addressing vacant properties: ensuring that servicers maintain properties REO property disposition: return REO properties into productive use, affordable housing Ensuring continued access to credit and homeownership: credit repair, financial education, responsible lending

30 For More Information: FRBSF Community Development Website Links to other resources and research on foreclosure trends and mitigation strategies All publications, presentations available on our website Conference materials also posted shortly after events