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» VISIT US ONLINE @ DSNEWS.COM THE LEADER IN DEFAULT SERVICING NEWS HOMEOWNERSHIP AT LOWEST RATE IN NEARLY 50 YEARS and fewer people are sharing in the American dream. A report released in late August by John Burns Real Estate Consulting revealed the "real" homeownership rate—measured as the percent- age of households that own a home and are not seriously delinquent on their mortgage—has fallen to 62.1 percent, the lowest level in almost half a century. The firm says the Census Bureau's 65.5 per- Whether by choice or circumstance, fewer cent homeownership estimate was a vast over- estimate, as it includes 3.8 million homeowners who are 90 or more days delinquent. While the government and various lenders has widened in recent years for several reasons, including the economic downturn and the growing number of borrowers who have figured out how to keep their homes for an extended period without paying. Adding to the widening gap, according to John Burns Real Estate, are banks' understaff- ing and fears of improperly documenting the foreclosure process—problems that have delayed foreclosures but not prevented them. While the firm remains confident in the have taken steps to help struggling homeowners, John Burns Real Estate speculates those people are "really just renters in waiting." The spread between published and real homeownership rates has historically stayed slightly below 1.0 percentage point. That spread shared dream of homeownership, writer and John Burns Real Estate manager Sean Fergus says it's time to face facts. "In summary, let's stop pretending that 65.5 percent of Americans own their home, recognize that the real number is 62.1 percent, and move forward with responsible mortgage programs that allow Americans to achieve the American dream," Fergus wrote. NEW YORK FED REPORTS MORTGAGE DELINQUENCY RATES DOWN IN Q2 ment brought mortgage delinquencies down in the second quarter, the Federal Reserve Bank of New York reported in late August. The New York Fed released its latest Low interest rates and better debt manage- Quarterly Report on Household Debt and Credit, revealing the delinquency rate for mortgages, including first mortgages and home equity installment loans, declined to 6.3 percent over the April-to-June period. Transition rates for current mortgages were in some stage of delinquency, down from 9.3 percent the previous quarter. "The continuing decrease in delinquency unchanged, with 1.8 percent of current mort- gage balances transitioning into delinquency. The rate of transition from early (30-60 days) to serious (90-plus days) delinquency fell to 23.5 percent, contrasted by a slight drop in the rate of delinquent mortgages becoming current to 28.5 percent. An estimated 256,000 consumers had a Help shape the next issue of DS News. Drop us a line at Editor@DSNews.com. rates suggests that consumers are manag- ing their debts better," said Wilbert van Der Klaauw, VP and economist at the New York Fed. "As they continue to pay down debt and take advantage of low interest rates, Americans are moving forward with rebalancing their household finances." The New York Fed estimated that about $1.02 trillion of outstanding household debt was delinquent at the end of the second quarter, with $765 billion of that considered seriously de- linquent. Outstanding household debt has been trending downward since peaking in Q3 2008. Mortgage balances on consumer credit re- foreclosure notation added to their credit reports during the second quarter, the lowest number since mid-2007. The decline in mortgage delinquency helped fuel a drop in overall consumer credit delin- quencies in the second quarter. As of the end of June, 9.0 percent of outstanding debt was ports fell to $8.15 trillion, a 0.5 percent drop from Q1. At the same time, balances of home equity lines of credit (HELOC) dropped 3.7 percent. These falls appeared to be instrumental in decreasing debt balances—excluding mortgages and HELOCS, household debt balances actu- ally increased 0.4 percent in Q2, led largely by auto and student loans. 49

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