The Wall Street Journal reported behind its normal firewall today on a rising problem, and how nice the banks are being in dealing with it.
As the number of borrowers falling behind on their mortgage payments climbs to the highest level in five years, the mortgage industry is trying new strategies to help bail them out.
Much of the attention is on homeowners who in recent years took out adjustable-rate mortgages, a popular way to finance a home when interest rates were low. Now, with rates having moved up, many of these borrowers have recently seen, or soon will see, their mortgage rates adjust higher for the first time.
Oh, is that a problem?
Still, the banks will work with people who are behind. After all, the last thing they want is to be the proud owners of a house in a falling market. For example, we have a seller who bought new house in Dallas before he managed to sell his house in Vegas:
Mr. Klain says his Las Vegas house, which is in a gated community and has a swimming pool, is valued at $419,000, according to a recent bank appraisal, well below the $440,000 he owes on the property. "The dump in the market put us behind the eight ball," he says.
Oops. Oh, and there is the problem with mortgage backed securities. Banks may be willing to restructure since they don't want to own a house, but the security that they sold? Not always as friendly.
The good, or bad, news, depending on how you look at it, is that the current delinquencies, though higher than seen in a while, are pretty well balanced throughout the country. Even Riverside/San Bernardino/Ontario is only at 4.1% while the entire US is at 2.5%. Balance, in this case, is probably good.