The survey, released by credit research outfit TransUnion, classifies borrowers as delinquent when they are 60 days or more past due on their home loans.

“As expected, the mortgage sector continued to experience increases in the delinquency rate due to worsening economic conditions in both the labor and financial markets,” said Keith Carson, a senior consultant in TransUnion’s financial services group, in a release on Monday.

Florida had the highest borrower delinquency rate in the third quarter, which came in at 7.82%, while Nevada was just behind it with a rate of 7.71%. North Dakota had the lowest rate at 1.35%, followed by South Dakota at 1.6%, and Montana at 1.71%.

The states that saw the biggest increases in delinquency rates were the District of Colombia, up 42.7%, followed by North Dakota, up 22.7%, and Idaho, which saw a 21.7% increase. West Virginia was the only state to record a drop in delinquency rates for the third quarter.

The average national mortgage debt per borrower was up 0.2% to $192,287 from the second quarter’s total of $191,681.

TransUnion says it expects delinquencies to continue to rise in the fourth quarter of 2008 and throughout 2009, according to Carson, who adds that the national delinquency rate could go as high as 7%.

“Depending on the severity of the capital markets crisis, the ultimate outcome of the decline in the U.S. auto industry and the timing of a recovery in retail sales,” Carson said in a statement, “we see the possibility of a flattening of mortgage delinquencies as the economy begins to stabilize and some sectors of the country begin to improve in the second quarter of 2010.”

Many of my senior clients, who thought they were financially secure to enjoy retirement, are being forced to uncover alternative sources of funds.

One of the increasingly popular tools being used today by seniors who own their primary residences is the reverse mortgage.

The reverse mortgage is a special type of home loan that lets homeowners convert a portion of their equity into cash. The size of a reverse mortgage is determined by a borrower’s age, the interest rate, and home’s value. A borrower can take the proceeds from the loan in a lump sum, on a monthly basis, or as a home equity line of credit. The borrower retains title to the property, and homeowners are still responsible for taxes, insurance, and upkeep.

Unlike a traditional home equity loan or second mortgage, no repayment is required until all borrowers cease to use the home as a principal residence.

After the home is sold and the loan is paid off, any remaining equity in the home belongs to the borrowers or their heirs. Reverse mortgages can protect against depreciation, and borrowers will continue to receive payments even if they owe more than the value of the house with no additional liability.

How can you decide if a reverse mortgage is right for you? Ask yourself the following questions:

n Are you a homeowner 62 or older who lives in a primary residence and has equity built up?

n Are you planning on staying in your home for the foreseeable future, at least five years?

n Do you find yourself short of funds each month?

n Are you having difficulty finding other sources of funds because of credit or limited income?

If you answered yes to any of these questions, then it may be time to seriously consider a reverse mortgage.

Because individual circumstances differ, it is always wise to consult a qualified financial adviser and involve family members before making a decision.

There are situations when a reverse mortgage would not be a wise choice. Because of the higher up-front costs and compounding interest associated with these loans, it usually does not make sense for borrowers who intend to move soon. Also, if the borrowers’ health is declining and there is a good chance they may have to move into a nursing home, the reverse mortgage would not be a good choice. Once all borrowers are out of the home for a period of 12 months, which includes stays in nursing homes, the mortgage becomes due and payable. The interest accrued is still tax deductible at termination.

Do your research before making a decision, and talk with your advisers and family. Reverse mortgages are not for everyone, but they have helped many seniors with necessary expenses and added to the quality of life.

“A lot of people rely on liquidating their portfolios over their lifetime to supplement their income. Now they’re asking if there’s a way to use the equity in their home instead of selling their portfolio in a bad time,” Frontier Bank’s Jerry Dawson said, the Seattle Times reported Monday.

The FHA raised the limit to $417,000 recently, from $352,790.

More than 100,000 reverse mortgages, which are not repaid while the borrower stays in the home, have been taken out this year, the Times said.

“It’s going to allow those people who own higher-priced homes to access a lot more of the equity of their homes for whatever need they may have,” said Darryl Hicks, associate director of the National Reverse Mortgage Lenders Association in Washington.

A reverse mortgage is a way to use the equity of a home as an annuity, with the debt on the home increasing in correlation with the size of the loan.

What’s more, HUD last month instituted new rules for Home Equity Conversion Mortgages, or HECMs, the federally insured loans that make up virtually all reverse mortgages. The new law may make reverse mortgages more attractive by raising the limit on qualifying home values, capping origination fees and, starting in 2009, allowing seniors to use a reverse mortgage to buy a new home in a single closing.

Still, these loans remain expensive, and can be risky. Here’s what you need to know:

Reverse mortgages 101: Reverse mortgages allow homeowners age 62 or older to borrow money based on their home equity, with the principal and interest repaid when they die or move out for a year or more. Cash is available in a lump sum, monthly payments, a line of credit (which typically grows 5% to 5.5% annually) or a combination. These loans are available from major financial institutions, including Wells Fargo, Bank of America (which acquired Countrywide), M&T Bank, MetLife and Genworth.

When the loan comes due, the senior (or his or her heirs) can sell the home or buy the equity back. The good news: If the house is worth less than the total amount due, they pay only the value of the home.

The Federal Housing Administration, a component of the U.S. Department of Housing and Urban Development, insures the nation’s most popular reverse mortgage — known as the Home Equity Conversion Mortgage.

The Housing and Economic Recovery Act of 2008 recently approved that mortgage for its purchase program, allowing lenders to close them after Jan. 1. The move allows older homeowners to make a large downpayment on a new home and then utilize the reverse mortgage as permanent financing.

The same law reduced the maximum loan fee on reverse mortgages to 2 percent on the initial $200,000 of the home’s value and 1 percent on the balance thereafter, with a cap of $6,000. Previously, the fees were capped at 2 percent of the home’s value or the county lending limit, whichever was lower.

A reverse mortgage historically has enabled senior homeowners to convert part of the equity in their homes into tax-free income without having to sell the home, give up title, or take on a new monthly mortgage payment. Reverse mortgages are available to individuals 62 or older who own their home. Funds obtained from the reverse mortgage are tax-free.

“The HECM for purchase will give seniors several more options,” said Sarah Hulbert, president of Senior Financial Corp., (www.sfcreverse.com) a reverse mortgage lender. “I think one of the key aspects is that they can stay more liquid. They do not have to reinvest all of their funds into their new home before getting the reverse mortgage, freeing up more cash for other uses.”

For example, if a 70-year-old homebuyer wanted to purchase a $300,000 home, he or she could put approximately $123,000 down and finance the balance of $177,000, plus closing costs, with a reverse mortgage. The buyer would make no monthly payments for as long as he or she maintained the home as a principal residence.

Interest and mortgage insurance premium accrues on the initial loan amount and become due when the borrower, or surviving spouse, dies, moves or sells the home. The current annual percentage rate for the monthly adjusted HECM 200 is 3.62 percent (including the government’s 0.5 percent annual mortgage insurance). When refinanced, the rate for the program has averaged approximately 6.5 percent for the past 15 years.

Eligible properties include:

1-to-4 unit single-family homes.

Manufactured homes, built after June 15th 1976, that meet HUD’s permanent foundation guidelines.

Condominiums.

“I think you will see the typical purchaser for a home equity conversion mortgage will be the move-down buyer — perhaps headed to the sunshine,” said former Puget Sound resident Ken Keranen, who now originates reverse mortgages for Seniors Reverse Mortgage (www.seniorsreversemortgage.com) in Carlsbad, California.

Customers interested in the conversion mortgage for purchase must enroll in a HUD counseling class. Borrowers may not obtain a bridge loan (also known as gap financing) or borrow against other assets for the downpayment or closing costs. This restriction includes personal loans, cash withdrawals from credit cards, seller financing and any other lending commitment that cannot be satisfied at closing.

Lenders will be required to verify the source of all funds prior to closing. A verification of deposit, along with the most recent bank statement, may be used to verify savings and checking accounts. If there is a large increase in an account, or the account was opened recently, the lender must be able to obtain a credible explanation of the source of those funds

To avoid cases of property flipping, lenders must take steps to ensure that: Only current owners of record may sell properties that will be financed using FHA-insured mortgages; any resale of a property may not occur 90 or fewer days from the last sale to be eligible for FHA financing; and FHA will require additional documentation validating the property’s value for resale that occurs between 91 and 180 days where the new sales price exceeds 100 percent of the previous sales price.

More than 450,000 conversion mortgages have been made since 1989, the year FHA launch its reverse mortgage pilot program. FHA insured approximately 112,000 home equity conversions in fiscal 2008, up from 107,367 in 2007 and 43,131 in 2005.

The only challenge seniors now face in this slow market is finding a willing buyer to purchase their present home so they can “move down” via a reverse mortgage. After all, you have to sell your primary residence before you can buy another one.

Tom Kelly’s book “Cashing In on a Second Home in Mexico: How to Buy, Rent and Profit from Property South of the Border” was written with Mitch Creekmore, senior vice president of Houston-based Stewart International. The book is available in retail stores, on Amazon.com and on tomkelly.com.

* November house prices flat from October; breaks monthly

declines since August 2007

* Third-quarter residential building value lowest in 6 years

By Gyles Beckford

WELLINGTON, Dec 8 - New Zealand’s prime minister said on Monday he expected the economy to experience only a shallow recession, a view that was backed by Treasury comments suggesting consumers will start spending more.

Housing data also provided some tentative evidence that the recession was losing some intensity by showing that prices in November were flat from October, the first time since August 2007 that prices had not fallen from the previous month.

Still, many analysts argue that New Zealand’s economy will struggle to shake off recession in coming quarters given how rapidly the world economy is sliding into a downturn.

New Zealand’s economy contracted in both the first and second quarters, meeting the common definition of recession. Figures due on Dec. 23 are expected to show the economy contracted further in the third quarter as the country felt the reverberations of the global financial crisis.

“The domestic recession is clearly worsening and we expect this to be compounded by a global recession. The need for easier monetary policy is intense,” said Goldman Sachs JBWere economist Shamubeel Eaqub.

Prime Minister John Key told Television New Zealand a rapid series of rate cuts by the central bank would help support the economy so that the recession would be a shallow one. But the rate cuts would further knock the New Zealand dollar, which has fallen 35 percent from March peaks.

“It’s a reflection of the fact that interest rates drive the exchange rate, and interest rates were cut aggressively, which was a good thing,” the former foreign exchange dealer said.

A new Reuters poll has a median forecast for the New Zealand dollar to be $0.5260 by the end of March next year, before rising to $0.5600 by the end of 2009. It was changing hands at $0.5340 on Monday.

The Reserve Bank of New Zealand cut its benchmark rate by a record 150 basis points to 5 percent on Dec. 4 and said further cuts may be possible, although the central bank’s governor said the economy had probably already moved out of its first recession in a decade. It has cut the rate four times since July.

The Treasury said falling consumer and commodity prices accompanied with tax cuts and lower interest rates would support spending in the fourth quarter, albeit temporarily.

The remarks reinforced its forecast that the economy would resume growth in the fourth quarter.

“These factors will support private consumption in the December quarter,” the department said in its monthly economic indicators report.

The Treasury has forecast that the economy was flat in the third quarter, neither growing nor shrinking.

But a Reuters poll suggests the economy shrank by 0.5 percent in the third quarter, extending contractions of 0.3 percent in the second quarter and 0.2 percent in the first quarter.

Underlining expectations of a third-quarter contraction, the value of residential building work fell in the quarter to its lowest level in six years, data from government agency Statistics New Zealand showed. [ID:nWEL407223]

Pushing into the fourth quarter, November house prices were 6.8 percent lower than a year earlier, falling at the same annual rate as October. But from the month earlier, they were flat, rather than falling for the first time in over a year.

“We may be seeing signs of a slight spring recovery,” said a spokesman for Quotable Value, a government agency that released the data.

The Treasury forecast further weakness in the labour market with the unemployment rate rising to 4.5 percent from 4.2 percent in the fourth quarter and reaching 5.5 percent in a year’s time.

Retail home lenders have cut their fixed and floating mortgage rates in response to the central bank’s rate cuts.

The Royal Institution of Chartered Surveyors’ seasonally adjusted house price balance improved to -76.5 in November from -81.0 in the month before.

That was the highest level since February and indicates some easing in the rate of decline but still points to a very depressed housing market.

Completed sales per surveyor fell to 10.6 from 10.9, their lowest level since the series began in 1978. Sales are down 55 percent on the year as the global credit crunch has all but killed the market.

“The main factor that is depressing prices is the large stock of property on estate agent books relative to the pool of available buyers, rather than in any surge in distressed selling,” RICS said.

Stock on surveyors’ books fell to 78.3 from 80.5, but this was more because of potential vendors choosing to let their properties given the difficulties of finding a buyer.

(Reporting by Sumeet Desai; Editing by Ruth Pitchford) Keywords: BRITAIN HOUSEPRICES/RICS

(Reuters messaging: sumeet.desai.reuters.com@reuters.net; +4420 7542 7708)

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The trade body, which is currently finalising its forecasts for 2009, said it was considering not predicting what would happen to house prices during the year because of the low level of transactions.

Instead it may focus on predictions in its core areas such as lending levels, repossessions and the number of homes changing hands.

A CML spokeswoman said: “There is questionable value in making a prediction [on prices].

“Whatever we say will be very high profile and unless we can do it credibly and with confidence, it is questionable whether it makes sense to do it at all.”

But she added that the group had not “absolutely” decided not to include a prediction on house prices in its forecasts for next year when it announces them in the coming fortnight.

It was disclosed last week that the CML had told the Government that repossessions could soar to 75,000 next year, up from about 45,000 this year, although it stressed that it had not yet finalised the figure.

House price predictions are particularly challenging for 2009 as it is difficult to know how different factors will impact on the market.

Steep interest rate falls could boost the market, but this will only happen if lenders are able to lift the current squeeze on mortgages.

On the other hand the recession and rising unemployment could further depress prices, particularly if the market is flooded with repossessed homes.
These news feeds are provided by an independent third party and Channel 4 is not responsible or liable to you for the same.

“In November 2008 nominal year-on-year house price growth was barely positive and at its lowest level since late 1992,” Absa said in a statement.

The average nominal price of a house was up by a tiny 0,3% year on year in November, down from a revised growth rate of 0,7% year on year in October.

“These trends brought the average nominal price of a house to about R963500 in November.”

Current economic conditions and expectations for the next 12 months on the global and local fronts did not suggest a turnaround and significant recovery in the housing market in the near future, it added.

Jacques du Toit, senior property analyst at Absa Home Loans, forecast nominal price growth at about 4% for this year compared to 14,5% last year, based on price trends in the first 11 months of the year. Year-on-year nominal house price deflation in the middle segment of the market was expected by year-end or early 2009.

In real terms, middle-segment house prices were projected to drop by around 7% this year, with a further real decline of about 4,5% expected next year.

Nominal house price growth in respect of small houses was a negative 0,3% last month from a positive year-on-year growth rate of 0,9% in October.

The average nominal price of a small house was recorded at R670300 last month, 0,5% lower than in the preceding month.
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Du Toit said the forecast for nominal house price growth was a dip below 3% next year, with the market expected to bottom in the first half of next year and recover gradually thereafter on the back of declining inflation and expected lower interest rates.

In all housing categories, activity levels and price growth were expected to remain under pressure for most of the first six months of 2009 and all segments would pick up gradually towards the end of next year. With Sapa

In this city, particularly in the newer developments outside the Strip, the city’s center, there are tens of thousands of homes in or facing foreclosure. A massive boom, speculative buying, lax lending standards and an enormous run-up in home prices over the past decade are now unraveling at a fast pace.

Two years ago, buyers were so eager to buy homes here they lined up and camped out in front of sales offices. For many years, Las Vegas’ population was increasing at a rate of more than 5,000 people a month. To manage demand, builders meted out their homes, and there were lotteries to select bidders.

“It was ridiculous,” says Brian Burns, a graphic designer who found himself priced out of the market for several years, and then bought a home in 2005 in the Henderson suburb for $304,000.

Many of the homes in those kinds of neighborhoods now sell for half the price they fetched in 2006 — including Burns’, which he was told recently would sell for $145,000.

Looking out over Highway 215, which cuts through North Las Vegas, there are stretches of thousands and thousands of homes — all built within the last five years — that seem to extend right to the foot of the Las Vegas mountain range.

Foreclosures Stack Up

Within the basin of greater Las Vegas, the foreclosure rate in October was more than seven times the national average — about one in every 60 homes, according to market research firm RealtyTrac. But more staggering, perhaps, is the fact that half of all homes in the Vegas area are worth less than the loans owed on them. There’s more to come: Every month, several hundred more homeowners fall behind on payments.

No one is immune from this housing mess. The realtors and mortgage officers NPR interviewed are all under water on their homes, meaning they owe more than their homes are worth. Jeremy Aguero, a Las Vegas-based economic analyst, was the one exception—though he says he would be, too, had he not aggressively paid down his home.

Aguero, who founded the consultancy Applied Analysis, is nevertheless sanguine about Las Vegas coming out of its housing hole. He and others believe the housing sector will rebound when the economy as a whole comes back — bringing back the tourism industry that sustains much of the city. But in the immediate term, he also sees promise in the recent uptick in home sales, which he says will help cycle through some of the excess inventory on the market.

“And people forget, you know, there are still half a million people here who are still paying their mortgages,” he says.

Real Estate Speculation

Dave Shaffer runs Shaffer Realty in the shadow of the famed Las Vegas Strip. The condo where he lives is worth roughly one-third less than what he owes, he says. With prices so low, he and several partners decided to invest in a condo in September. They bought it for $105,000, which was about half what it sold for a couple years before. But in the two months since then, it’s lost another $20,000 of value.

That’s simply par for the course, he says. On a block of one neighborhood in North Las Vegas, there are two foreclosed homes for sale right next to each other. Next to that, another home is also selling at a deep discount.

“This is a brand new house. Never been lived in,” Shaffer says, his voice echoing off the empty walls. “And this is a speculator who got 100 percent financing, so what investment did they have in the market? None.”

Shari Springer is also a longtime real estate agent and owns three homes she bought for $600,000 or more. She’d hoped to rent them for retirement income, but now pays more on the mortgages than she can make up in rent.

The fall in prices, she says, is a result of banks trying to unload foreclosed properties at fire-sale prices. Each one of those sales drives down the price of the neighborhood’s homes even more.

“The banks are competing with each other,” she says, and most homeowners can’t afford to sell at such a low price. There is talk in Washington, D.C., of lowering the mortgage interest rates for home buyers to 4.5 percent, though that plan is not a done deal. And financing, Springer says, is still hard to come by for new buyers. Bargain hunters are hamstrung, which means the inventory of the thousands of bank-owned properties will just sit on the market, she says.

Renters Feel Impact

Even renters are affected by this crisis. Samantha Dolgin lives across the street from three homes for sale. She says she had to move there earlier this year because her previous landlord went into foreclosure. Dolgin was told she could lease to buy her previous home. Instead, the foreclosure notice came and she had to vacate within 30 days, she says.

Virginia Cavallaro lives next to foreclosed homes. While everyone around her leaves or puts their homes up for sale, she’s stuck because she and her husband paid a lot of money down on their home.

“It’s very difficult to live here,” she says. In every direction around her, Cavallaro says, people are trying to jump ship. Earlier this year, she counted 48 homes in her development for sale — but almost none of them could get any interest among buyers.

Walking Away

For an untold number of people, simply walking away from a home has become an option.

Such is the case for Burns, the graphics designer in Henderson. He lost his job in May, as casino advertising fell. He fell behind on payments and tried unsuccessfully to get his lender to modify his loans so he could meet payments. So he’s selling many of his things, packing his car and letting his lenders figure out how they can recoup the most for their investment.

With a perfect credit score three years ago, he was able to finance the entire house — so he has little to lose. The one thing he put money into was the backyard, which features a gas fireplace and a grill. But he says he’s even now.

“I feel bad, kind of like I’m not pulling my weight in this crisis,” Burns says. But the only move that makes sense, he says, is to move away.

Part two of this series will explore how Las Vegas residents are coping with the mortgage workout process.