Some forecast recovery, but housing difficulties remain

05.29.09
By Nicholas Storie

Although only 5 percent of respondents to a new survey expect economic recovery to begin before the year is out, over half see 2010 as the year for a turnaround.

A new quarterly survey of lenders by Phoenix Management reveals that 31 percent of respondents expect economic recovery to begin within the next year and another 31 percent say financial improvement will happen within 18 months.

Despite this improved economic outlook from lenders, many financial strains remain on the economy and on consumers.

New data released from the Mortgage Bankers Association indicates that homeowners are still struggling to manage their personal financial situations and a growing number are falling behind on mortgage loan payments.

The group reports that delinquencies and foreclosures are both climbing to record-high levels.

According to the MBA's National Delinquency Survey, on a seasonally adjusted basis, the delinquency rate stood at 9.12 percent of all home loans outstanding at the end of March 2009.

The delinquency rate calculated by the group accounts for home loans that are at least one payment past due but does not include properties already in foreclosure. The number of loans in foreclosure also jumped, says the MBA, to 3.85 percent of all loans at the end of the first quarter.

"The increase in the foreclosure number is sobering but not unexpected," said Jay Brinkmann, MBA's chief economist.

"In looking at these numbers, it is important to focus on what has changed as well what continue to be the key drivers of foreclosures. What has changed is the shifting of the problem somewhat away from the subprime and option ARM/Alt-A loans to the prime fixed-rate loans," he added.

Brinkmann said that California, Florida, Arizona and Nevada continue to be the hardest hit states and contribute significantly to the weak state of the housing market.

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Many homeowners still struggle with loan payments