TRENDS IN DELINQUENCIES
AND FORECLOSURES IN
OREGON

                                 January 2010


Craig Nolte, Community...
National Trends

   Signs that the economy is starting to grow and move
    out of the recession
     GDP   positive for...
National Trends
GDP Shows Positive Growth in
    3rd Quarter 2009
                                         Real Gross Domestic Product
   ...
Weakness in Labor Market Grave Concern

                                                                        U.S. Unemp...
Dramatic Increase in
   Duration of Unemployment
                                           Median Duration of Unemploymen...
Case-Shiller Shows Continued Uptick
      in House Prices in 3rd Qtr 2009
                                      Case-Shill...
FHFA Shows Continued Declines, Reflecting
                                          Activity at Lower End of Market
      ...
National Foreclosure Rate Remains High

                                                    National Foreclosures Starts
 ...
Concern that Upcoming Resets will
Continue to Drive New Foreclosures
                         Monthly Mortgage Rate Resets...
Loan Modifications:
          Home Affordable Modification Program
             200,000


             180,000


         ...
Although there are Signs of Improvement, Small
Businesses Still Face a Tightened Credit Market
              Senior Loan O...
Oregon Trends
Unemployment Rate in Oregon Fell in 3rd
           Qtr. 2009
            14.0



            12.0



            10.0
Unem...
Oregon Seeing Softening of Real Estate Market

                                                                FHFA House ...
Bend Experiencing Steepest Decline in House
                                           Prices
                            ...
Low Tier Has Seen Greatest Changes in
     House Prices
                               Tiered Case- Shiller Home Price Ind...
Oregon Saw a Continued Increase in Foreclosure Starts
                                          in 3rd Quarter 2009
      ...
Growing Concerns over Sustainability of Loans with
Payment Options (in subprime, prime and Alt-A markets)
                ...
Oregon Foreclosure Data Maps
Oregon Data Maps
           Areas Affected by Concentrated Foreclosures
                                                  ...
Oregon Data Maps
           Areas Affected by Concentrated Foreclosures
                                                  ...
Oregon Data Maps
           Areas Affected by Concentrated Foreclosures
                                                  ...
Portland Area Data Maps
            Areas Affected by Concentrated Foreclosures
                                          ...
Portland Area Data Maps
                  Areas at Risk of Additional Foreclosures
                                       ...
Conclusions
Continued Need for Foreclosure Prevention

   Important to reach borrowers with ‘preventable’
    foreclosures
       Bo...
Preventing Foreclosure Scams
   Foreclosure scams are proliferating, especially in
    markets with investor interest
   ...
Stabilizing Communities and Helping Families
After Foreclosure

   Develop service delivery and resources for families wh...
For More Information:
FRBSF Community Development Website
   Links to other resources
    and research on
    foreclosure...
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Federal Reserve Bank of SF on Oregon Real Estate Jan 2010

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Federal Reserve Bank of SF on Oregon Real Estate Jan 2010

  1. 1. TRENDS IN DELINQUENCIES AND FORECLOSURES IN OREGON January 2010 Craig Nolte, Community Development Department, Federal Reserve Bank of San Francisco
  2. 2. National Trends  Signs that the economy is starting to grow and move out of the recession  GDP positive for the first time since start of 2008  Major weaknesses still exist in the housing, labor, and credit markets  Foreclosures continue to rise  Although the HAMP program has succeeded in reaching 728,408 distressed borrowers (as of November 2009), few of these modifications have been made permanent and scale still falls significantly short of need.
  3. 3. National Trends
  4. 4. GDP Shows Positive Growth in 3rd Quarter 2009 Real Gross Domestic Product (percent change at seasonally adjusted annual rate) 10.0 8.0 6.0 4.0 GDP % change based on 2.0 chained 2005 dollars 0.0 -2.0 -4.0 -6.0 -8.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Bureau of Economic Analysis
  5. 5. Weakness in Labor Market Grave Concern U.S. Unemployment Rate 12.0 10.0 8.0 Unemployment Rate 6.0 4.0 2.0 0.0 1989 1993 1997 2001 2005 2009 Recession Source: Bureau of Labor Statistics, December 2009
  6. 6. Dramatic Increase in Duration of Unemployment Median Duration of Unemployment 25 20 Weeks 15 10 5 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Bureau of Labor Statistics
  7. 7. Case-Shiller Shows Continued Uptick in House Prices in 3rd Qtr 2009 Case-Shiller National House Price Index (2000 = 100, quarterly) 200 180 160 140 120 100 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Case - Shiller Home Price Index
  8. 8. FHFA Shows Continued Declines, Reflecting Activity at Lower End of Market FHFA (formerly OFHEO) House Price Index (2000=100, quarterly) 170 160 150 FHFA House Price Index 140 2000=100 130 120 110 100 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Federal Housing Finance Agency (formerly OFHEO)
  9. 9. National Foreclosure Rate Remains High National Foreclosures Starts Percent of All Loans 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2000 2002 2003 2004 2005 2006 2007 2008 2009 Source: Mortgage Bankers Association, National Delinquency Survey
  10. 10. Concern that Upcoming Resets will Continue to Drive New Foreclosures Monthly Mortgage Rate Resets (first reset in billions of US dollars) Source: Credit Suisse: Assessing Risks to Global Financial Stability, p. 8. http://www.imf.org/external/pubs/ft/gfsr/2007/02/pdf/chap1.pdf
  11. 11. Loan Modifications: Home Affordable Modification Program 200,000 180,000 160,000 140,000 Loan 120,000 Modifications 100,000 80,000 60,000 40,000 20,000 0 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 New HAMP Trial Plans Offered to Borrowers New HAMP Active Trial and Permanent Modifications Source: HAMP Service Performance Report Through Nov. 2009: http://www.financialstability.gov/docs/MHA%20Public%20121009%20Final.pdf
  12. 12. Although there are Signs of Improvement, Small Businesses Still Face a Tightened Credit Market Senior Loan Officer Opinion Survey on Bank Lending: Net Percentage of Domestic Respondents Tightening Standards for C&I Loans 100 80 60 40 20 0 -20 -40 2001 2002 2003 2004 2005 2006 2007 2008 2009 Medium and Large Businesses Small Businesses
  13. 13. Oregon Trends
  14. 14. Unemployment Rate in Oregon Fell in 3rd Qtr. 2009 14.0 12.0 10.0 Unemployment Rate 8.0 Oregon 6.0 United States 4.0 2.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Recession Source: Bureau of Labor Statistics
  15. 15. Oregon Seeing Softening of Real Estate Market FHFA House Price Index (formerly OFHEO) (2000=100, quarterly) 190 Oregon 180 170 FHFA House Price Index 160 United States 2000=100 150 140 130 120 110 100 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Federal Housing Finance Agency (formerly OFHEO)
  16. 16. Bend Experiencing Steepest Decline in House Prices FHFA House Price Index (formerly OFHEO) (2000=100, quarterly) 250 230 Bend 210 Medford FHFA House Price Index 2000=100 190 Portland 170 Salem 150 130 110 90 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Federal Housing Finance Agency (formerly OFHEO)
  17. 17. Low Tier Has Seen Greatest Changes in House Prices Tiered Case- Shiller Home Price Index: Portland (2000 = 100) 250.00 200.00 150.00 100.00 Low Tier Middle Tier Upper Tier 50.00 0.00 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: Case - Shiller Home Price Index
  18. 18. Oregon Saw a Continued Increase in Foreclosure Starts in 3rd Quarter 2009 Oregon Foreclosure Starts (Percent of All Loans) 1.2 Foreclosure Starts (Percent of Loans) 1.0 0.8 0.6 0.4 0.2 0.0 2005 2006 2007 2008 2009 Source: Mortgage Bankers Association, National Delinquency Survey
  19. 19. Growing Concerns over Sustainability of Loans with Payment Options (in subprime, prime and Alt-A markets) Characteristics of Remaining "Current" Loans 9 8 7 Percent of Total Current Loans 6 5 4 3 2 1 0 Interest Only Jumbo Option Arm United States Oregon
  20. 20. Oregon Foreclosure Data Maps
  21. 21. Oregon Data Maps Areas Affected by Concentrated Foreclosures February 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations
  22. 22. Oregon Data Maps Areas Affected by Concentrated Foreclosures November 2008 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations
  23. 23. Oregon Data Maps Areas Affected by Concentrated Foreclosures November 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations
  24. 24. Portland Area Data Maps Areas Affected by Concentrated Foreclosures June 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations
  25. 25. Portland Area Data Maps Areas at Risk of Additional Foreclosures June 2009 Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations
  26. 26. Conclusions
  27. 27. Continued Need for Foreclosure Prevention  Important to reach borrowers with ‘preventable’ foreclosures  Borrower Outreach Events  Create a foreclosure prevention workbook -- for an example see Arizona’s: http://www.pima.gov/current/2008_November%20English%20Workbook.pdf  Making Homes Affordable  Federal program provides both loan modification and refinance options  Online form available that allows borrowers to assess if they qualify for the program  http://makinghomeaffordable.gov/eligibility.html
  28. 28. Preventing Foreclosure Scams  Foreclosure scams are proliferating, especially in markets with investor interest  Some counties are sending notices to all delinquent borrowers to warn them about foreclosure scams  Free media kit available from the Federal Reserve which includes a PSA and other resources: http://www.federalreserveeducation.org/pfed/mediakit.cfm  NeighborWorks PSA: http://www.youtube.com/nwpad  Other 5 Tip brochures and resources available from the Federal Reserve http://www.federalreserve.gov/consumerinfo/fivetips.htm
  29. 29. Stabilizing Communities and Helping Families After Foreclosure  Develop service delivery and resources for families who go through foreclosure  Rental housing assistance  Credit repair  Minimizing disruption for children (e.g. allowing them to finish the school year in their old school)  Minimize negative spillover effects of vacant properties on surrounding neighborhood  Ensure servicer maintenance of REOs  Work with lenders/servicers to acquire and rehab foreclosures for affordable housing
  30. 30. For More Information: FRBSF Community Development Website  Links to other resources and research on foreclosure trends and mitigation strategies  All publications, presentations available on our website  Conference materials also posted shortly after events http://www.frbsf.org/community/

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