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April 16, 2014

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Report: Number of past-due mortgages likely to increase

While numbers are improving nationwide, report shows more pain for Nevada

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Steve Marcus / File photo

Nevada led the nation in mortgage delinquency in the second quarter of 2009, at the height of the Great Recession. Increasing unemployment rates and falling home values, such as in this Henderson neighborhood, put a pinch on Nevadans.

Nevada's beleaguered residential real estate market is expected to deteriorate through the end of the year, a national credit-rating agency forecast Monday.

TransUnion.com said Nevada led the nation's mortgage borrower delinquency list in the second quarter with 13.8 percent of such loans past-due. That is up from 11.61 percent in the first quarter.

For the second quarter, Nevada was again ahead of No. 2 Florida (12.3 percent) -- and that trend is likely to continue.

"Nevada has now eclipsed Florida as the state anticipated to experience the highest mortgage delinquency rate by the end of 2009, reaching as high as 16 percent," the Chicago company said as it released data for the second quarter and a forecast for the rest of the year.

Hit hard since 2007 by the subprime mortgage meltdown as homeowners were unable to make higher payments when interest rates reset higher, Nevada is also suffering from soaring unemployment driven by the national recession.

The unemployment rate hit 12.3 percent in June in the Las Vegas area as the economic downturn sharply reduced visitation to Las Vegas casino resorts -- and curtailed residential and commercial construction.

In the second quarter, mortgage loan delinquency (the ratio of borrowers 60 or more days past due) increased nationwide for the 10th straight quarter, hitting an all-time national average high of 5.81 percent -- up from 5.22 percent in the first quarter.

Year-over-year, U.S. mortgage loan delinquency is up about 65 percent, from 3.53 percent in 2008's second quarter.

While the news for Nevada looks grim, the trend nationwide is improving, TransUnion said.

"In its first quarter analysis, TransUnion reported a potential positive sign in mortgage delinquency rate trends. For the first time since the recession began at the end of 2007, the quarter-to-quarter growth rate for national mortgage delinquency showed a decrease," FJ Guarrera, vice president of TransUnion's financial services division, said in a statement. "Now, with the release of second quarter results, we see even more deceleration in mortgage delinquency, an indication that the mortgage market is beginning to stabilize.

"There are several complementary economic statistics at the national level to support this guarded optimism, such as the increase in consumer confidence in the second quarter. As for the labor market, although unemployment had continued to rise through the second quarter, July figures for unemployment insurance were lower than expected. Furthermore, recent figures from the government show the unemployment rate actually dipping to 9.4 percent nationally in July. These encouraging economic signs, coupled with a decrease in the rate of mortgage delinquency growth, suggest that we may have seen the worst of the recession. This is particularly noteworthy, in that delinquency statistics are generally lagging indicators of the economic environment," Guarrera said.

Monday's report follows these reports last week:

--RealtyTrac of Irvine, Calif., said that for the 31st consecutive month, Nevada had the nation's highest foreclosure rate in July, with one in every 56 housing units receiving a foreclosure filing in July -- more than six times the national average.

--Zillow.com of Seattle said Las Vegas was the third worst-performing residential real estate market in the second quarter, with home prices down 34.6 percent year-over-year, falling to a median of $140,500. And 82.5 percent of Las Vegas home mortgages had negative equity, the company said.

--The Greater Las Vegas Association of Realtors said July home sales remained strong because of foreclosure-driven lower prices. The Realtors said July's median price of existing single-family homes in Las Vegas was $138,800, down 0.9 percent from June; while the median price of condominiums and townhomes was $67,000, up 1.5 percent.

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