TRENDS IN DELINQUENCIES AND FORECLOSURES IN

Transcription

1 TRENDS IN DELINQUENCIES AND FORECLOSURES IN ARIZONA April 2009 Jan Bontrager, Community Development Department, Federal Reserve Bank of San Francisco

2 Outline of Presentation National Trends Rising foreclosures House price declines Rising unemployment Arizona 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 After a slight decline in the national foreclosure rate in the 3 rd Quarter of 2008, rose again in 4 th Quarter 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 National Foreclosure Starts Rose Slightly in 4th Quarter of National Foreclosures Starts Percent of All Loans Source: Mortgage Bankers Association, National Delinquency Survey, 4th 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, 4 th Q 2008

7 Recession Marks Significant Jump in Unemployment U.S. Unemployment Rate Unemploymen nt Rate Recession Unemployment Rate Source: Bureau of Labor Statistics

8 Ai Arizona Trends

9 Foreclosures in Arizona are Twice the National Average 3 Foreclosure Starts (Percent of All Loans) Alaska Washington Oregon Utah Idaho Hawaii US California Arizona Nevada 4Q Q Q Q 2008 Source: Mortgage Bankers Association, National Delinquency Survey, 4 th Q 2008

10 Unlike National Trends which seem to be Slowing, Arizona Continues to See Rising Foreclosure Rates 2.5 Arizona Foreclosure Starts (Percent of All Loans) Foreclosure Sta arts (Percent of Loans) Source: Mortgage Bankers Association, National Delinquency Survey, 4 th Q 2008

11 Arizona Has Seen Dramatic House Price Declines Since the Peak of Housing Boom 220 FHFA (formerly OFHEO) House Price Index (2000=100, quarterly) 200 FHFA House Price Index = Arizona United States Source: Federal Housing Finance Agency (formerly OFHEO), 4 th Quarter 2008

12 Phoenix Experiencing Greatest Declines in House Values 240 FHFA (formerly OFHEO) House Price Index (2000 = 100) 220 Flagstaff FHFA House Price Index = Tucson Yuma Phoenix-Mesa Source: Federal Housing Finance Agency (formerly OFHEO), 4 th Quarter 2008

13 Arizona s Foreclosures Remain Concentrated in Subprime ARM Market, though Subprime Fixed and Prime ARM also Risingi 10.0 Foreclosure Starts by Loan Type Percent of Fore eclosure Starts Prime Fixed Prime ARM Subprime Fixed Subprime ARM Source: Mortgage Bankers Association, National Delinquency Survey, 4 th Q 2008

14 Arizona Saw High Rates of High-Cost Lending During Subprime Boom 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 Arizona More Prevalent Among Minority Groups, Especially Latinos 60% High Cost Conventional Loans by Race, % 40% 30% 20% 10% 0% All borrowers White borrowers Asian/Pacific Islander borrowers Black borrowers Native American borrowers Hispanic/Latino borrowers Source: Home Mortgage Disclosure Act Data, 2005

16 Unemployment Rate in Arizona is Rising 9.0 Unemployment Rate Unemploymen nt Rate Arizona United States Source: Bureau of Labor Statistics, March 2009

17 Employment Trends by Industry in Arizona Total Employed (thousands) Percent Change Arizona Feb 09 1 mo.* 3 mo.* 12 mo. Total 2, Trade, Transportation & Utilities Government Professional & Business Svcs Educational & Health Srvs Leisure & Hospitality Financial Activities Manufacturing Construction Other Services Information Natural Resources & Mining Source: Bureau of Labor Statistics, February 2009, *Annualized

18 Significant Drop in Construction Employment 20 Construction Employment (percent change, year-over year) United States Arizona Source: Bureau of Labor Statistics, March 2009

19 Significant Drop in Financial Activities Employment 10 Financial Activities Employment (percent change, year-over year) United States Arizona Source: Bureau of Labor Statistics, March 2009

20 Ai Arizona Foreclosure Data Maps

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

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

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

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

25 Arizona Data Maps Areas Affected by Concentrated Foreclosures February 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009

26 Phoenix Data Maps Areas Affected by Concentrated Foreclosures February 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009

27 Phoenix Data Maps Areas with Concentrations of REO Properties February 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009

28 Phoenix Data Maps Areas at Risk of Additional Foreclosures February 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009

29 Tucson Area Data Maps Areas Affected by Concentrated Foreclosures February 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009

30 Oregon Tucson Area Data Data Maps Maps Areas with Concentrations of REO Properties February 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009

31 Tucson Area Data Maps Areas at Risk of Additional Foreclosures February 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, February 2009

32 Loan Modifications as Share of Loan Workouts Have Increased 8,000 Arizona Loan Workouts 7,000 r Hope Now Servic cers) Nu umber (Adjusted fo 6,000 5,000 4,000 3,000 2,000 1,000 0 Q Q Q Q Q Q Repayment Plans Loan Modifications Source: Hope Now Alliance Servicing Data, 4 th Quarter 2008

33 Yet, Workouts Still Fall Short of Need 70,000 Foreclosure & Delinquencies v. Loan Workouts in Arizona 4th Quarter ,000 (Adjusted for Hope Now Servicers) Number 50,000 40, ,000 20,000 10,000 0 Serious Delinquencies Foreclosure Starts Foreclosure Sales Repayment Plans Loan Modifications Source: Hope Now Alliance Servicing Data, 4 th Quarter 2008

34 Conclusions

35 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 t the Hope Hotline by calling (888) 995-HOPE or visiting

36 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

37 For More Information: FRBSF Community Development elopment 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