Subprime ARM Delinquencies in WA State
Here is a PDF link to a PPT presentation given by the Director of the Dept of Financial Institutions (DFI) at the state Mortgage Broker's Convention last week. DFI is the regulatory body that oversees mortgage brokers in WA.
http://www.dfi.wa.gov/cs/pdf/current_re ... market.pdf
See slide #11 for the subprime ARM delinquencies in WA state.
Some quotes:
"However, the latest reported delinquency rates, especially in the area of "subprime"ARM loans, are of serious concern even in Washington State."
"With these trends likely to get worse before they get better, Washingtonians should remain watchful."
DFI Director Scott Jarvis also offers some stats on mortgage fraud in the PPT. Prompted in part by laxtosnoco's question on the housing bubble forum here, I'll be doing a brief, 4-part series on mortgage fraud over at RCG. I believe fraud is going to get worse as people (home sellers, industry folks on commission who haven't closed a transaction in a while) get more desperate.
http://www.dfi.wa.gov/cs/pdf/current_re ... market.pdf
See slide #11 for the subprime ARM delinquencies in WA state.
Some quotes:
"However, the latest reported delinquency rates, especially in the area of "subprime"ARM loans, are of serious concern even in Washington State."
"With these trends likely to get worse before they get better, Washingtonians should remain watchful."
DFI Director Scott Jarvis also offers some stats on mortgage fraud in the PPT. Prompted in part by laxtosnoco's question on the housing bubble forum here, I'll be doing a brief, 4-part series on mortgage fraud over at RCG. I believe fraud is going to get worse as people (home sellers, industry folks on commission who haven't closed a transaction in a while) get more desperate.
Comments
http://seattlepi.nwsource.com/local/333 ... dit26.html
Seems like we're not that special - we're pretty close to the national figures...
Jay, thanks for the PI link.
Correction: It's slide number 13 on DFI's powerpoint.
Interesting that in Washington State, FHA loans rated "seriously delinquent" are above our subprime ARM "serious delinquencies."
Before allowing HUD to do anything more than what they're already doing with FHA, I would like to know how much money current FHA delinquencies are costing taxpayers and projections of future FHA delinquencies.
And the pinkest elephant in the living room! No mention that, um, only an actual housing downturn would cause these tinderbox mortgages to combust, or that the velocity of events suggests a classic speculative bubble on the wane. It circles around it, yeah, but never ever mentions it - like at Thanksgiving when we pretend Pappy's not too drunk to carve.
Favorite lines:
- "The general relaxation of credit standards over the last 25 years should not be blamed for the present mortgage situation." [emphasis his. The "25 years" meme nicely points the shaming finger away from anyone not at their job 25 years ago - loan "officers," elected and appointed officials, Fed governors, congress, Wall Street traders, journalists, realtors... it wasn't me!)
- "But continued relaxation without consistent, adequate safeguards is partially to blame." [emphasis added. "Consistent, adequate"? How 'bout "any"?]
Jillayne or anyone attend this speech? Do you recall whether Jarvis spoke aloud the words "speculative," "bubble," "deflating," "for years to come," or "plotz"?
I did not hear the speech so I can't vouch for anything that might have been said regarding a bubble.
Realize that the author was speaking in the role of state regulator to a roomful of mortgage brokers. Their continued existence will continue to fund the salaries of his government staff including his salary. Polite restraint was most likely in order. His job was to show the audience what his division is doing to help consumers AND help the people in the audience.
The tangled web graphic is on slide number 28 and shows all the number state and federal laws governing mortgage lending, the state and federal agencies, and then all the possible types of business entities (bank, broker, and so forth.)
It sure makes me think that:
1) we absolutely do not need any more laws
2) we absolutely ought to expect that more laws will be passed.
I doubt it. Fraud always thrives most during bull markets since scrutiny becomes far more lax. In a bull market no one cares if corners are cut because rising asset prices make everything work in the end. By contrast, we are already seeing tightening lending standards, and greater scrutiny of deals. It is harder to commit real-estate fraud today than it was a couple years ago.
However, I agree that we are likely going to see an explosion in publicized real-estate fraud cases and prosecutions. But this is more a result of how declining asset prices now make the abuses of recent years obvious. Slow (or negative) appreciation will cause many of the various fraud schemes come unglued. Thus, we might have an impression that fraud has increased, due to more prosecutions, when in fact it is actually declining (i.e. because there is more scrutiny on new deals than there has been in past years).
Agreed. Historically, the fraud occurs while money is still being exchanged at an increased pace. There is less motivation to discover fraud then, as there is so much money being "made". It's afterwards that the previous fraud comes out. Think dotcom bubble. The scandals all came out after stock prices stopped heading up forever.