That was the exact headline of a story Bloomberg.com wrote February 10, 2010. Well, that certainly isn't good news for the U.S. housing market. However this is another example of bad news being exaggerated and made even worse. How do I mean? This article was based on research that was done by Zillow.com. Zillow's study found that 21.4% of mortgaged homes were underwater, not of U.S. Homeowners. What's the difference? As I had wrote about on my blog on January 25th, according to the U.S. Census Bureau, approximately 24 million owner-occupied homes have no mortgage on them. That's right, zero. Good for them! That means that instead of 21.4% of U.S. Homeowners, that number is more like 14%. Still not good, but that's an improvement by almost 2% from the previous month.

Let me share with you some encouraging news regarding the housing market and the economy.

The following is a direct quote from Jay Brinkmann, Mortgage Banker Association’s chief economist as published just last week. He said: “The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight.  We normally see a large spike in short-term mortgage delinquencies at the end of the year due to heating bills, Christmas expenditures and other seasonal factors.  Not only did we not see that spike but the 30-day delinquencies actually fell by 16 basis points from 3.79 percent to 3.63 percent.  Only three times before in the history of the MBA survey has the non-seasonally adjusted 30-day delinquency rate dropped between the third and fourth quarter and never by this magnitude.  If the normal seasonal patterns hold for the first quarter, we should see an even steeper drop in the end of March data." This is very encouraging news because 30-day delinquencies historically have been a leading indicator of serious delinquencies and foreclosures.  With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink . 

Finally, did you know that 140 banks failed in America in 2009? That represents 1.7% of the 8099 insured banks nationwide. What is interesting with this report is that the top 4 states with failed banks accounted for 77 of these failures and 30 States has 1 or none bank failures according to the FDIC.

Till next time, have an amazing week!

John Santorineos


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