Short sales up 268 percent from a year ago; Serious mortgage delinquencies up 147 percent for same period

Dennis Norman

Yesterday the Federal Housing Finance Agency (FHFA) released its foreclosure prevention report for July, 2009 for Freddie Mac and Fannie Mae loans.  Based upon the data in the report I would say it’s safe to say the housing market is going to continue to be challenged for a while. 

Ah, the opportunities though for the astute real estate investor…record numbers of foreclosures, REO’s and short sales with no end in sight.  The catch is what are you going to do with the house after you buy it?  Flip it?  Hmm..that’s getting more difficult by the day…banks continue to be unwilling to finance investment property for investors and the investors that don’t need financing have an awful lot to choose from.  You could rehab the house and sell it retail although in this market I would avoid this unless you can make such a good deal that you can do a very nice fix and then still sell the house at a very attractive price that will make it stand out from all of the competition.  Finally, you can lease the house out.  This is something many investors are turning to and while it gives you the opportunity to wait out this bad market and sell in a better market, it also makes it a much longer term deal for you which ties up your cash and credit and also puts you at risk of the value dropping if the market does not recover anytime soon.  I’m not saying not to buy, I’m just suggesting to be extra cautious and conservative in these times and have a well thought out plan.

On to the report.  Here are highlights from the report (all the data, unless noted otherwise is from July 31, 2009):

• There were 1,401,000 borrowers 60-plus days delinquent on their home mortgage in July 2009, this is a staggering 147 percent increase from a year ago when it was 566,000 borrowers.
  • This equates to 4.6 percent of Freddie Mac and Fannie Mae loans were 60 plus days delinquent.
• 6.76 percent of Freddie Mac and Fannie Mae loans were delinquent 30 days or more. Greater than 1 in 15 homeowners are delinquent on their mortgages. This has increased almost 20 percent since the beginning of the year when the rate was 5.68 percent.
• There were 5,492 short sales in July, up 23.6 percent from the month before and up a staggering 268 percent from a year ago. So far in 2009 there have been 25,251 short sales.

There were 23,369 foreclosures in July, which represents very little change from June’s 23,314 foreclosures. There were 85,342 new foreclosures started in July which is down over 30 percent from June’s 122,317 foreclosure starts.

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