TRENDS IN DELINQUENCIES AND FORECLOSURES IN IDAHO February 2009 Craig Nolte, Community Development Department, Federal Reserve Bank of San Francisco
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
National Trends
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
Percent of All Loans After Steady Rise, National Foreclosure Starts Dipped Slightly in 3 rd Quarter of 2008 1.20 National Foreclosure Starts (Percent of all loans) 1.00 0.80 0.60 0.40 0.20 0.00 2001 2002 2003 2004 2005 2006 2007 2008 Source: Mortgage Bankers Association, National Delinquency Survey, 3 rd Q 2008
Nationally, House Prices Continue to Decline 200 Case-Shiller National House Price Index (2000 = 100, quarterly) 180 160 140 120 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Case - Shiller Home Price Index, 3 rd Q 2008
Recession Marks Significant Jump in National Unemployment Insurance Claims 0.50 National Unemployment Insurance Claims, Percent Change Year-over-Year 0.40 0.30 0.20 0.10 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008-0.10-0.20-0.30 Source: Haver Analytics and FRBSF Calculations, annual percent change, 2000 Q3-2008 Q3
Idaho Trends
Foreclosure Starts (Percent of All Loans) Foreclosures in Idaho Have Risen Significantly, But Remain Below US Average 3.00 2.50 2.00 1.50 1.00 0.50 0.00 Alaska Washington Oregon Hawaii Utah Idaho US California Arizona Nevada 3Q 2005 3Q 2006 3Q 2007 3Q 2008 Source: Mortgage Bankers Association, National Delinquency Survey, 3 rd Q 2008
Foreclosure Starts (Percent of Loans) Yet Unlike National Trends, Idaho Saw an Increase in Foreclosure Starts in 3 rd Quarter 2008 0.90 Idaho Foreclosure Starts (Percent of All Loans) 0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 2005 2006 2007 2008 Source: Mortgage Bankers Association, National Delinquency Survey, 3 rd Q 2008
FHFA House Price Index 2000=100 Idaho Seeing Softening of Real Estate Market 190 FHFA House Price Index (formerly OFHEO) (2000=100, quarterly) 180 170 Idaho 160 150 United States 140 130 120 110 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Federal Housing Finance Agency (formerly OFHEO), 3 rd Quarter 2008
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 120 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 Source: Federal Housing Finance Agency (formerly OFHEO), 3 rd Quarter 2008
Percent of Foreclosure Starts Idaho s Foreclosures are Concentrated in Subprime ARM Market 6.0 Foreclosure Starts by Loan Type 5.0 4.0 3.0 2.0 1.0 0.0 2005 2006 2007 2008 Prime Fixed Prime ARM Subprime Fixed Subprime ARM Source: Mortgage Bankers Association, National Delinquency Survey, 3 rd Q 2008
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, 2005 30% 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
High Cost Lending in Idaho More Prevalent Among Some Minority Groups 45% High Cost Conventional Loans by Race, 2005 40% 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
Unemployment Rate Unemployment Rate in Idaho Has Risen Sharply 8.0 Unemployment Rate 7.0 6.0 United States 5.0 4.0 Idaho 3.0 2.0 1.0 0.0 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
Employment Trends by Industry in Idaho Total Employed (thousands) Percent Change Idaho Dec-08 1-mo.* 3-mo.* 12-mo. Total 628.8-17.1-11.8-4.3 Trade, Transportation & Utilities 126.1-7.3-12.0-4.8 Government 123.2 4.0 4.0 3.1 Professional & Business Svcs. 77.1-35.8-14.6-7.8 Educational & Health Srvs. 75.9 1.6-1.6 2.3 Leisure & Hospitality 60.2-29.8-16.6-5.9 Manufacturing 57.6-25.0-25.5-11.8 Construction 43.7-46.0-29.0-15.1 Financial Activities 30.7-34.5-13.1-3.5 Other Services 19.0 6.5-20.2-2.6 Information 11.4 0.0 7.3 4.6 Natural Resources & Mining 3.9-45.1-48.3-15.2 Source: Bureau of Labor Statistics, December 2008, *Annualized
Idaho Foreclosure Data Maps
Idaho Data Maps Distribution of Lending Volumes September 2007 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, September 2007
Idaho Data Maps Areas Affected by Concentrated Foreclosures September 2007 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, September 2007
Idaho Data Maps Areas Affected by Concentrated Foreclosures April 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, April 2008
Idaho Data Maps Areas Affected by Concentrated Foreclosures November 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, November 2008
Idaho Data Maps Areas with Concentrations of REO Properties November 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, November 2008
Idaho Data Maps Areas at Risk of Additional Foreclosures November 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations, November 2008
Number (Adjusted for Hope Now Servicers) Loan Modifications as Share of Loan Workouts Have Increased 2000 Idaho Loan Workouts 1800 1600 1400 1200 1000 800 600 400 200 0 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Repayment Plans Loan Modifications Source: Hope Now Alliance Servicing Data, 3 rd Quarter 2008
Number (Adjusted for Hope Now Servicers) Yet, Workouts Still Fall Short of Need 8,000 Foreclosure & Delinquencies v. Loan Workouts in Idaho 3rd Quarter 2008 7,000 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
Conclusions
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 www.995hope.org
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
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 http://www.frbsf.org/community/