HUD reports shocking 100% surge in 90-day mortgage delinquencies.

A new report from HUD shows a massive spike in mortgage delinquencies among FHA first-time homebuyers. These mortgage delinquencies are likely to lead to more foreclosures at the end of 2024.

The default rate on these mortgages is up to 11%. And has surged over the last year with the number of 90-day delinquencies now going up nearly 100% from their levels in 2019. Such a sharp rise in mortgage defaults implies that the US Housing Market could see more foreclosures over the next year.

Particularly in Sun Belt housing markets like Texas, Florida, Arizona, and South Carolina, where the defaults and inventory levels are rising fastest. That's because in these markets home prices are heavily overvalued, with many mortgage borrowers barely able to afford their payments.
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[ReventureConsulting]

FHA mortgage default rate has spiked over the last year. 100% surge in 90-day delinquencies from pre-pandemic levels. 5:15

Amazingly - 70% of these delinquencies are still protected from foreclosure. But those protections will expire over the next 6 months. 9:50

Prepare for more inventory and forced selling.

[Susanhartman.]

Keep in mind that during the 80’s people were encouraged to save due to the interest rates. Right now there’s very little incentive to save because those who are saving are watching those who are reckless taking it in. I’ve been trying to save for a home and it’s been discouraging to watch prices continue to not budge because there’s people willing to get into a mortgage where they’re paying 40% of their income. It’s insane.

[Millerj]

I’m 65 and I have about $250k liquid in savings which I plan to put towards becoming a homeowner but based on the current high prices on real estate, do you suggest I hold from buying or do stocks for now?

[HodgeChris]

Most Americans find it hard to retire comfortably amid economy downtrend. Some have close to nothing going into retirement, my question is, will you pay off mortgage as a near-retiree, or spread money for cashflow, to afford lifestyle after retirement?

[Riggsnic_co]

Back in the day, when I purchased my first home to live-in; that was Miami in the early 1990s, first mortgages with rates of 8 to 9% and 9% to 10% were typical. People will have to accept the possibility that we won't ever return to 3%. If sellers must sell, home prices will have to decline, and lower evaluations will follow. Pretty sure I'm not alone in my chain of thoughts.

[hersdera]

Mortgage rates are currently at an all time high since 2000(24 years) and based on statistics on inflation, we might see that number skyrocket further, a 30-year fixed rate was only 5% this time last year, so do I just keep waiting for a housing crash before buying or redirect my focus to the equity market

[BradPaisley]

After retiring recently, I'm uncertain whether my 401(k) and IRA will ensure a stable future. With $1 million set aside, I'm seeking an approach that matches my risk tolerance and financial objectives. Would you recommend investing in stocks or purchasing rental property?

[YoPhocFays]

Save your money. Don't buy property at this time

[corbinbarron-pk]

it's a cruel world indeed, With rates not as subsidised in ’24 and our mortgage still as high as 6.56%, we seek alternatives to maximize savings without an RV move or taking a loan. I’m seriously contemplating the latter.

[alyross]

“Why pay rent when you can own? You’re just throwing money away. You’re paying someone else’s mortgage!”
This is the mentality that gets unprepared people into homeownership.
Owning a home is much more than paying a monthly mortgage. You had better have a nice reserve of cash AFTER the down payment. And don’t plan on that vacation the year you buy a home. You will need that money for many other things.

[kyrieeleison]

Two years ago, I found your channel when my landlord's real estate agent was pressuring me to buy my rental home. Two other tenants bought their homes (he had a cluster of historic homes, including the one he and his wife lived in; a "microhood'), while I took your advice and waited it out. My home's zillow estimate is now $40k under what it was when he listed it; listings are surging in my Oregon town; and my landlord hasn't risen my rent at all (God Bless him!), so I'm paying $500 under market rate. I'm saving, saving, saving and waiting this out for the next couple years. I can see this getting worse...home prices are incredibly overvalued and there are only so many Californians and Portlanders to buy at these inflated prices. Price cuts of $10-20k were the norm for the last year or so, and initial list prices are inching down. Add to this the underemployed, the many layoffs at Intel, school districts, etc and it's clear things will continue getting worse (better for me though!) in Oregon.

[cubicleinvestor]

In South Carolina, we are starting to see properties fall out of contract multiple times now, even with price cuts.

[TylerofSc]

I have a 3% mortgage interest rate and suddenly became liquid from the sale of a business and i am confused if i should pay off my mortgage or invest in the stock market.

[Silvertip]

This happened to me in 08/09. I went through a divorce and had put 40k down on a 250k home. The value dropped to 200k. I lost 40k and never recovered it. This is not a good sign right now.

[AJfromLA]

If delinquencies are increasing with near full employment, just wait until large layoffs as companies cut costs as interest rates are still too high to borrow

[Automedon]

Buy a house and live in it for life. Stop upsizing every time you get an income raise or equity, and you won't have to worry about it.

[rosseryankeegirl]

Its wild...this is literally one of my favorite YT channels. This info lives rent free, everyday. Ive changed.😌

[ToriaBen]

I'm hoping there will be a housing crisis so I can buy cheaply when I sell a few houses in 2025. As a backup plan, I've been thinking about purchasing stocks. What advice do you have for choosing the best buying time? On the one hand, I continue to read and see trading earnings of over $500k each week. On the other side, I keep hearing that the market is out of control and experiencing a dead cat bounce. Why does this happen?

[GoldFever]

And yet, as an Agent here in Georgia, I'm NOT seeing foreclosures or shorts sales in my MLS. The Atlanta FMLS currently has over 25, 000 listings, today showing 10 short sales and 6 foreclosures. The banks would rather just package up their non-performing loans and sell them off to the FED or FNMA at par.

[cobra]

Defaults and foreclosures are lagging indicators. They offer confirmation of a market change.

Defaults are first - 60-90 days late is a default. It takes time to become a full blown foreclosure. This is because most people will try everything they can to stay in the house. In time people will lose hope earlier. In the 2008 crash "jingle mail" became a popular term where people simply gave up. Being in default or foreclosure wasn't seen as a stigma - it almost became a badge of honor - like I got railroaded by the system too...

It then takes time for the foreclosure inventory to start to rise. For a while the inventory will be absorbed and that's why the levels don't rise. Sellers not wanting to buy at any price or defaults increasing to epic proportions will saturate things and raise inventory. We are already in a free-fall collapse by the time the data shows rising foreclosure inventory levels.

When foreclosure inventory drops and when defaults and foreclosures return to baseline we're near the bottom.

Word of caution - banks and government will do as much as they can to prevent an economic detonation. Back after 2008 there was a shadow REO inventory. Houses that were foreclosed and vacant but not on the market. Some went years and I had a few I kept an eye on in my neighborhood. It took 5 years for one to hit the market. That's 5 years from when the bank took it back at auction till they listed as an REO.

Back in the 90's when the S&L's fell, which by the way, the big banks did the exact same thing... But when the S&L crisis was happening they let houses hit the market without any restrictions and in some areas it crushed prices - like 50% declines.

My father bought a condo in Palm Springs in 1987 for $160k. Around 1990 he refi'd it with a 231k appraisal. In 1994 he sold it for $140k. It wouldn't be fun if you were the person who bought at $231k and sold at $140K. Of course today they're valued at $500k.

Be very careful if you are buying today. If you are trading a house for a house it's probably not a big deal because all ships rise and fall on the same tide, but if you don't have a locked in sale on an old house or if you're buying for investment I would be very cautious.

We will go into a recession because of this and it will take 2-3 years at a minimum till we're at the bottom. Remember, when defaults, foreclosures and foreclosure inventory are back to norms we're at the bottom. Actually, a little past the bottom. Defaults will be the first indicator to come back to normal. Just watch for games that distort those readings.