Geithner Sees "Economic Improvement" As Mortgage Delinquencies Hit All Time High

Tyler Durden's picture

We'll have whatever Timmy is drinking. Even as Mr. Geithner, in prepared congressional testimony, claims that the economy is "recovering", the MBA announced yet another record number of mortgage delinquencies. At over 14%, the number of American homeowners either in delinquency or in foreclosure was an all-time record in September, representing a ninth straight quarterly increase. According to the AP: "The Mortgage Bankers Association's quarterly report adds to fears that
the housing market's recovery could be thwarted by the continuing surge
in home loan defaults, especially as the unemployment rate keeps
rising. Lost jobs, rather than the shady loans made during the housing
boom, are now the main reason homeowners fall into default." Our hope is that maybe Mr. Geithner will also testify also as to what particular brand of Kool-Aid he drinks when he makes such baseless and irresponsible statements.

The biggest looming threat - heretofore considered safe Prime loans: "Prime
fixed-rate loans continue to represent the largest share of
foreclosures started and the biggest driver of the increase in
33 percent of foreclosures started in the third quarter
were on prime fixed-rate and loans and those loans were 44 percent of
the quarterly increase in foreclosures.  The foreclosure numbers for
prime fixed-rate loans will get worse because those loans represented
54 percent of the quarterly increase in loans 90 days or more past due
but not yet in foreclosure."

The full MBA report below:

Delinquencies Continue to Climb in Latest MBA National Delinquency Survey

The delinquency rate for
mortgage loans on one-to-four-unit residential properties rose to a
seasonally adjusted rate of 9.64 percent of all loans outstanding as of
the end of the third quarter of 2009, up 40 basis points from the
second quarter of 2009, and up 265 basis points from one year ago,
according to the Mortgage Bankers Association’s (MBA) National
Delinquency Survey. The non-seasonally adjusted delinquency rate
increased 108 basis points from 8.86 percent in the second quarter of
2009 to 9.94 percent this quarter.

Top Line Results

The delinquency rate breaks the record set last quarter.  The records are based on MBA data dating back to 1972.

delinquency rate includes loans that are at least one payment past due
but does not include loans somewhere in the process of foreclosure. 
The percentage of loans in the foreclosure process at the end of the
third quarter was 4.47 percent, an increase of 17 basis points from the
second quarter of 2009 and 150 basis points from one year ago. The
combined percentage of loans in foreclosure or at least one payment
past due was 14.41 percent on a non-seasonally adjusted basis, the
highest ever recorded in the MBA delinquency survey.

The percentage of loans on which foreclosure actions were started during the third quarter was 1.42 percent, up six basis
points from last quarter and up 35 basis points from one year ago.

The percentages of loans 90 days or more past due, loans in foreclosure, and foreclosures started all set new record highs. 
The percentage of loans 30 days past due is still below the record set in the second quarter of 1985. 

Increases Driven by Prime and FHA Loans

the recession ending in mid-summer, the decline in mortgage performance
continues.  Job losses continue to increase and drive up delinquencies
and foreclosures because mortgages are paid with paychecks, not
percentage point increases in GDP.  Over the last year, we have seen
the ranks of the unemployed increase by about 5.5 million people,
increasing the number of seriously delinquent loans by almost 2 million
loans and increasing the rate of new foreclosures from 1.07 percent to
1.42 percent,” said Jay Brinkmann, MBA’s Chief Economist.

fixed-rate loans continue to represent the largest share of
foreclosures started and the biggest driver of the increase in
foreclosures.  33 percent of foreclosures started in the third quarter
were on prime fixed-rate and loans and those loans were 44 percent of
the quarterly increase in foreclosures.  The foreclosure numbers for
prime fixed-rate loans will get worse because those loans represented
54 percent of the quarterly increase in loans 90 days or more past due
but not yet in foreclosure.

performance of prime adjustable rate loans, which include pay-option
ARMs in the MBA survey, continue to deteriorate with the foreclosure
rate on those loans for the first time exceeding the rate for subprime
fixed-rate loans.  In contrast, both subprime fixed-rate and subprime
adjustable rate loans saw decreases in foreclosures.

foreclosure rate on FHA loans also increased, despite having a large
increase in the number of FHA-insured loans outstanding.  The number of
FHA loans outstanding has increased by about 1.1 million over the last
year.  This increase in the denominator depresses the delinquency and
foreclosure percentages.  If we assume these newly-originated loans are
not the ones defaulting and remove the big denominator increase from
the calculation results, the foreclosure rate would be1.76 percent
rather than 1.31 percent reported.

“Once again the states of
Florida, California, Arizona and Nevada have a disproportionate share
of the mortgage problems.  They had 43 percent of all foreclosures
started in the third quarter, down only slightly from 44 percent both
last quarter and the third quarter last year.  They had 37 percent of
the nation’s prime fixed-rate loan foreclosure starts and 67 percent of
the prime ARM foreclosure starts.  As of the end of September, 25
percent of the mortgages in Florida were at least one payment past due
or in foreclosure.

“The outlook is
that delinquency rates and foreclosure rates will continue to worsen
before they improve.  First, it is unlikely the employment picture will
get better until sometime next year and even then jobs will increase at
a very slow pace.  Perhaps more importantly, there is no reason to
expect that when the economy begins to add more jobs, those jobs will
be in areas with the biggest excess housing inventory and the highest
delinquency rates.  Second, the number of loans 90 days or more past
due or in foreclosure is now a little over 4 million as compared with
3.9 million new and previously occupied homes currently for sale,
although there is likely some overlap between the two numbers.  The
ultimate resolution of these seriously delinquent loans will put added
pressure on the hardest hit sections of the country.”

Change from last quarter (second quarter of 2009)

seasonally adjusted delinquency rate increased 43 basis points for
prime loans (from 6.41 percent to 6.84 percent), 107 basis points for
subprime loans (from 25.35 percent to 26.42 percent), and two basis
points for VA loans (from 8.06 percent to 8.08 percent). The
delinquency rate for FHA loans decreased six basis points (from 14.42
percent to 14.36 percent). The non-seasonally adjusted delinquency rate
for FHA loans however, increased 134 basis points this quarter (from
13.70 percent to 15.04 percent).

The non-seasonally adjusted percentage of loans
in the foreclosure process increased 20 basis points for prime loans
(from 3.00 percent to 3.20 percent), and increased 30 basis points for
subprime loans (from 15.05 percent to 15.35 percent). FHA loans saw a
34 basis point increase in foreclosure inventory rate (from 2.98
percent to 3.32 percent), while the foreclosure inventory rate for VA
loans increased 22 basis points (from 2.07 percent to 2.29 percent).

The non-seasonally adjusted foreclosure starts
rate increased 13 basis points for prime loans (from 1.01 percent to
1.14 percent), increased 16 basis points for FHA loans (from 1.15
percent to 1.31 percent), and increased 19 basis points for VA loans
(from 0.68 percent to 0.87 percent). This rate decreased 37 basis
points for subprime loans (from 4.13 percent to 3.76 percent).

The seriously delinquent rate, the
non-seasonally adjusted percentage of loans that are 90 days or more
delinquent, or in the process of foreclosure, was up from both last
quarter and from last year. This measure is designed to account for
inter-company differences on when a loan enters the foreclosure

Compared with last quarter, the rate increased
82 basis points for prime loans (from 5.44 percent to 6.26 percent),
216 basis points for subprime loans (from 26.52 percent to 28.68
percent), 89 basis points for FHA loans (from 7.78 percent to 8.67
percent), and 37 basis points for VA loans (from 4.69 percent to 5.06

Change from last year (third quarter of 2008)

The seasonally adjusted delinquency rate increased 250 basis points for prime loans, 639 basis points for subprime loans,
144 basis points for FHA loans, and 80 basis points for VA loans.

The foreclosure inventory rate increased 162 basis points for prime loans, 280 basis points for subprime loans, 100 basis
points for FHA loans, and 83 basis points for VA loans.

The foreclosure starts rate increased 35 basis points overall, 53 basis points for prime loans, 36 basis points for FHA loans,
and 28 basis points for VA loans. The starts rate decreased 47 basis points for subprime loans.

The seriously delinquent rate increased 339 basis points for prime loans, 912 basis points for subprime loans, 262 basis points
for FHA loans, and 161 basis points for VA loans.

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aint no fortunate son's picture

Some of the first words out of his mouth were "moral hazard bad".

No shit timmy, you frigging hypocrite.

Hero Protagonist's picture

Tim Geithner = Sychophant = a self-seeking, servile flatterer; fawning parasite.

TraderMark's picture

Dear Tim,


The recovery has now progressed to the point the sum of US foreclosures plus >90 days late is greater than new + existing homes for sale.

Did I mention the 18.7M empty homes?

Divided States of America's picture

Timmy and O-team thinks that if everything eventually hits all time highs, its a good thing....Dow, EURUSD, Unemployment rate, Mortgage Delinquencies, etc....

Those fools definitely are smoking weed and getting high.

Overpowered By Funk's picture

TD while your drinking Geithners Kool-Aid, try whatever Steve Liesman is smoking - whatever it is it makes cloudy skies sunny.

docj's picture

With each passing day it's becoming harder to figure out what is actual news and what is parody from The Onion.

Cognitive Dissonance's picture

Assume it's all parody and you begin from a position of strength. I always assume people who do not have my best interest at heart will lie to me or at least color the truth to their advantage.

Expecting little truth from others who have power over you allows you to see the truth easier. But when you hope you're getting the truth but you can't tell the truth from the lies, you're frozen in place like a jack lighted deer.

False hopes bind us to impossible conditions and situations. Expecting people who are burdened with conflicts of interest to act in your best interest is wishful thinking and will only lead to heart ache. This is why they lie to us, to freeze us in place so we become helpless sheep and dependent upon them.

Resist the impulse to hope they will do the right thing. Once you overcome this hurdle, then you can begin to plan and protect yourself and your loved ones.

Screwball's picture

Well said as usual CD, you have a wonderful way with words.

I took your approach long ago, but I think age helps with that approach, as well as the numerous experiences of learning your lesson the hard way.

As they used to say on the X-Files; the truth is out there.  Unfortunately, we now must go hunt for it.

Cognitive Dissonance's picture


Thank you for your compliment.

I've been thinking along the lines of "I think age helps with that approach" but there is a contradiction here.

In most societies, including the US up to the late 80's and early 90's, older usually meant wiser and younger meant more innovation and willingness to try new ideas and to challenge the status and authority of the older wisdom. To use a broad sweeping generalization, younger generations were more radical.

But this has not exerted itself over the past 20 years. I've been waiting for unrest to erupt on college campuses for years. Yes, I understand a lot of the unrest in the 60's and 70's was based upon a unpopular war and the draft into that war.

Colleges (centers of higher learning in general) have usually been centers of out-of-the-box thinking at the same time they were bastions of conventional thinking and the establishment. Somehow that has become co-opted this time around.

I'm not ready to expand on my thoughts on this yet for my ideas are still forming. But I believe some of this contradiction comes from the massive infiltration of corporations into the higher education forums, including the military industrial complex and pharma in general.  

Just as large, if not more so, is the effect on what I like to call the "Gaming Generation", of video games that seem to plug directly into the centers of the brain. An astonishing large number of young adults are addicted to video games. And I do mean addicted. Take the game(s) away and they become irritable, restless, angry, violent and so on. All the classic symptoms of withdrawal from an addictive substance.

This is where I think in 20-30 years we will find startling evidence of severe brain dysfunction. Addiction severely distorts what you and I would consider "normal" behaviour. Again, lots more for me to work through here but it's an interesting path to follow.

Screwball's picture

Understand completely CD, and couldn't agree more.  When you have all your thoughts put together, please share them with us.  I do appreciate the thoughts and insights from people such as yourself and quite a few other on this board.  ZH contributors and posters are part of what brings me here.

Lux Fiat's picture

I am also one of many who has appreciated your insights and musings on the real nature of things.

As dual income families have proliferated, more children have spent their early formative years in child care centers.  They are taught to conform, to do as they are told, and they have a more constrained environment/world than what I enjoyed growing up many years ago.  I don't mean to imply that all child care is bad or pass judgement on working parents, but I think that many of our current generation of college students grew up in this kind of environment.  Unless they were naturally disposed to question the world around them, or had parents at home who, after a busy day at work, were willing to spend time giving their children insights into the "real" workings of the world (one small dose at a time) and foster individuality, it seems to me that there would be a predisposition to uniformity of views and thoughts. 

Regular K-12 (and perhaps college) already does this, but for a while now, it's been starting at an even earlier age.  I only had two teachers in high school who truly encouraged and rewarded independent thought, and who tried to open windows on different ways of viewing the world, including ones that they personally did not agree with.

Also, when you actively invest or trade, you quickly learn to see what is really in front of you, or you will be slaughtered.  In other words, those who start off with rose-colored glasses find that they need to come off pretty quickly if they are going to survive in the investment jungle.  I didn't truly appreciate how naive I was until I started actively trading equities with my own money (and there is much that I still don't know). 

Folks with a hard science background also get a lot more training in understanding self-imposed constraints and trying to fit the thesis to the facts, and not the other way around (well, most of the time).  However, if you look at the population at large, those possessing these backgrounds I would guess comprise a small minority.  Age and it's hard lessons will remove some of the rose-colored glasses.  In some cases, they will never come off.

Screwball's picture

Well said Lux. 

TPTB, in whatever environment it may be today, seem to want nothing but ass kissing, pretty boy, robots.  Politically correct at all times, never question anything, and above all, be the servant and worshiper.  My ex-company sent us to training classes teaching us to never talk negative about anything, just tow the company line, suck it up, kiss their pompous ass, and above all keep your mouth shut.  Be nothing but a friken sheep.

I put up with it for as long as I could.  I did my best to do a good job and make them money, and I made them a bunch of it.  But the incessant ass kissing by demand, lying because I had to, and most of all keeping my mouth shut became too much.  So I told them to stick it and walked out. Just couldn't take any more of the lunacy.

So now I'm an old man that can't find a job, and probably won't.  But semi-retired, trading stocks and reading Zero Hedge ain't so bad, as long as I can afford it.

I hate corporate America, I hate being politically correct, and I sure as hell ain't no fuckin sheep.  But I won't blame being rasied the way I was. I was lucky.  For that I thank my parents who allowed me to take on the world, rather it returned failure or rewards.  Thanks Mom, you didn't raise a damn sheep.

Lux Fiat's picture

Agreed there are to many sheep.  Need folks who can play well with others, but also think for themselves. 

The events of the past year could give you an entirely different perspective on the phrase "Silence of the Lambs".

Bubby BankenStein's picture

I hope that you as well as many of us can avoid returning to the corporate squirrel cage.

With children 28 & 26, I have had plenty of exposure to Millenials, mostly high achievers.  IMHO they are much more attuned to and compliant with the "System".  While they in my experience tend to be industrious and of very good ethical values, they seem to have less courage and adventurist desire than the Boomers.

Sadly, I believe the Millenials also share the despair many of us older people have over the hollowed out productive economy we have today.

Lux Fiat's picture

Screwball, may "Luck be a lady" to you in your trading endeavors, and my admiration for living life on your terms, even when it is not always the easy path.

Daedal's picture


Never let schooling interfere with your education. I believe Mark Twain said that.

With the exception of math, I haven't learned a thing going through the public education system in America. And the only reason I was good at math was b/c my parents, who were immigrants, engraved levels of math into my head years before I saw it in an American text book. More over, having survived the education system relatively unharmed, it has taken  some time to unlearn the idiocy I was forced to digest in school -- primarily in the field of economics, and also history (Thank you, great savior, FDR!) Unless you're an engineer, scientist, or doctor, school is a waste of time. I learned that lesson from 'Good Will Hunting'.

Education should be a humbling experience; you should realize the vast amount of information that has yet to be digested. A PhD, especially in the field of quantum mechanics, should be more dumbfounded after his degree than before. The biggest farce is that those who get a diploma have been convinced that they are geniuses -- they are the future. The future will inherently be great as a result of these schmucks entering the workforce. It's ludacrous. The dean gives a speech about some distinguishing characteristic that makes these people feel like they are the reason the dean has bothered to get out of bed. Meanwhile, he ushers in a new set of chumps which will be paying a compounded 10% higher tuition for the next 4 years.

Somewhere in my rant I wanted to point out that these people are cogs, who are convinced they are anything but. I think the only way they'll snap out of it is when they will be forced to think and act for themselves. As long as our nanny state persists, it will keep most people complacent.


deadhead's picture

Please keep up the good words CD!  I always enjoy reading your insights.

Thank you.

delacroix's picture

exactly; it's unreasonable expectations that lead to disappointment. corruption starts with just a little coloring, and eventually becomes outright fraud.

BorisTheBlade's picture

This last piece from The Onion was actually quite believable: If they reported it on the CNN I wouldn't be able to say whether it's true or not.

D.O.D.'s picture

No bandwidth left... man I gotta upgrade to a t1, or one of them fancy fiber optics...

Can someone post a link to a vid rather than a stream? (once it's done obviously...)

saladbarbeef's picture

The Bloomberg headline is, "Geithner says US Economy will expand in current quarter."

Is that an order, Timmy? Or just drivel hope-cheer-happy for the headlines?


As Franklin Sanders puts it:  The Fed only has two weapons: Inflation and Blarney.


digalert's picture

I can't stand listening to this lying complicit guilt free punk. "Everybody's been paid off, everyones ass is covered so we stand firm that no institution, save GS / JPM, wille ever become TBTF. blah blah bullshit blah. Remember bubble Ben and shifty Paulson never saw this coming.

tj3's picture

or any fo them. wtf are they supposed to say?

no really what do you think a disassembler by profession is supposed to say?

anynonmous's picture

Rep. Brady asks Geithner to resign

but Timmay ducks and says that problems were inherited

Brady then asks Timmay to remind everyone what his prior job was


Brady to Timmay

You have to take responsibility


John Self's picture

Yes, inherited from the last Secretary of the Treasury and his right-hand man, the President of the Federal Reserve Bank of New York.  Oh, wait....

Racer's picture

Yes, the prudent people who had a bit of savings tucked away and drew on the interest to fund those little extras or essentials have been forced by the Fed to drain down their capital instead.

Nice one!


Give free money to the banksters but no interest to the savers


Bubby BankenStein's picture

How long will ordinary citizens put up with these policy blunders?  The audacity of screwing austerity and rewarding the reckless is confounding unless one assumes ethical bankruptcy is the defining characteristic of policy makers.

Anonymous's picture

Geithner just got his A** handed to himself in his hearing! He was asked ro resign! I sure wished he would.

Bubby BankenStein's picture

Give it time.  He will be jerked off the stage due to poor acting.

Careless Whisper's picture

The Bankruptcy Courts need to be able to do cram-downs on mortgages. Another Bama broken campaign promise.

phaesed's picture

Anyone have a link to the live feed? I can't find it on CSPAN

ayanni's picture

If you havn't already - read Mid-to-High End Mortgage & Housing Market - A Slower Moving Train Wreck.  Hanson nails it.


I need more cowbell's picture

Widdle Timmy needs his mommy, I frink he is gonna cry

Steak's picture

Ephor #1: Sparta wages no war at the time of the Carneia.
King Leonidas: Sparta will burn! Her men will die at the arms of their women and children will be slaves or worse!
Ephor #2: Trust the gods, Leonidas.
King Leonidas: I’d prefer you trusted your reason.

Our modern day Ephors sit in the Fed and Treasury reading their squiggly lines (at least chicken bones once had meat on em) and dictating the course of this nation's finances.  Their oracles say that all is improving.  The hollowing out of the middle class and destiution facing most of us doesn't show up in their squiggly lines so in their opinion such pressures either don't exist or don't matter.

The economy doesn't need you.

tj3's picture

people are just numbers until they aren't

JohnKing's picture

Timmay and buddies:


Profile of the Sociopath

    * Manipulative and Conning
      They never recognize the rights of others and see their self-serving behaviors as permissible. They appear to be charming, yet are covertly hostile and domineering, seeing their victim as merely an instrument to be used. They may dominate and humiliate their victims.

    * Grandiose Sense of Self
      Feels entitled to certain things as "their right."

    * Pathological Lying
      Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex belief about their own powers and abilities. Extremely convincing and even able to pass lie detector tests.

    * Lack of Remorse, Shame or Guilt
      A deep seated rage, which is split off and repressed, is at their core. Does not see others around them as people, but only as targets and opportunities. Instead of friends, they have victims and accomplices who end up as victims. The end always justifies the means and they let nothing stand in their way.

    * Callousness/Lack of Empathy
      Unable to empathize with the pain of their victims, having only contempt for others' feelings of distress and readily taking advantage of them.

    * Irresponsibility/Unreliability
      Not concerned about wrecking others' lives and dreams. Oblivious or indifferent to the devastation they cause. Does not accept blame themselves, but blames others, even for acts they obviously committed.

    * Lack of Realistic Life Plan/Parasitic Lifestyle
      Tends to move around a lot or makes all encompassing promises for the future, poor work ethic but exploits others effectively.

    * Criminal or Entrepreneurial Versatility
      Changes their image as needed to avoid prosecution. Changes life story readily.

tj3's picture

Hey JohnKing, welcome to the world...just wake up or what?

nice DSM

JohnKing's picture

No, been awake for awhile, just feel like going back to sleep though as this blatant destruction of the middle class is all too sickening. It's pretty clear to me that the top slots in our government/corporate matrix are filled by psychopaths. They prey on our hope.

Cognitive Dissonance's picture

There you go, the proper usage of the term psychopaths. Bravo!

We have been conditioned by a polite society and myth making via books, newspapers and TV that all psychopaths are violent, insane and mindless. Or at least focused on one thing only, usually killing. This is an extremely misleading and ultimately self destructive popular misconception.

psychopath psy·cho·path (s?'k?-p?th')
A person with an antisocial personality disorder, especially one manifested in perverted, criminal, or amoral behavior.

The keys here are antisocial criminal or amoral behavior.I don't see anything here about guns or murder or blood. I could write for hours on this subject but the bottom line is that what's being done to us by these people fits the description of antisocial criminal or amoral behavior.

We must stop hoping that these psychopaths will change their ways when they don't view what they're doing as wrong. We are constraining ourselves by our own moral conduct while they have no such self imposed limits. We seem to think these people are redeemable or at least willing to stop if told sternly enough. We are deluding ourselves with our own magical thinking.

In some ways we are sicker than they are, evidenced by our own denial of what's happening right in front of our eyes.

JohnKing's picture

We have been conditioned by a polite society and myth making via books, newspapers and TV that all psychopaths are violent, insane and mindless.


Only the unsuccessful psychopath lands in real trouble, for the most part they roam free, thriving on predation of others. It's only natural that they would gravitate to those fields where they can be rewarded for acting without conscience (finance). That is why I am sick and tired of these Wall Street types being referred to as "the best and brightest", they aren't, they are simply super-predators. They are not punished for bad behaviour, on the contrary, they are rewarded. A few generations ago, people like this were reviled by society at large.

tj3's picture

To JohnKing...yeah we need to sleep so that we may awaken with some measure of clarity.

To Cd...FoxNews and all the MSM are the proxies for the people's ?anger, disillusionment, delusions?...etc...all one's life can be lived within four walls.

D.O.D.'s picture

Another common misconception is the idea that any evidence of aggressive behavior is evidence of a psychotic break.  It seems more and more, polite society would choose to pretend that humans are not emotional beings, subject to the whims of nature and chaos( that's for a Jerry Springer episode); but rather happiness machines.

This, of course, has been indoctrinated into society via any mass marketing mechanism you can think of.

It's becoming more and more evident, the further we delve into Artificial Intelligence,  that the human brains' lack of precision is exactly what allows conciousness to exist.  The neocortical column is about as chaotic as it gets, and if you believe the Gama Oscillations theory, quite possibly the source of the soul.  2+2=?

Remember there are known knowns, and known unknowns, but there are also unknown uknwons...

Anonymous's picture

The credit system is in the beginning process of collapsing. There has only been a wave up within the wave down in equities.

The credit has no way of expanding forever....

Credit system is clearly trying to run in reverse, in a stupid system that humans have created with compounding interest... it is impossible for that to happen without catastrophic collapse due to Math.

See Federal Reserves Z1 report... system is collapsing.

bugs_'s picture

I don't have to mark it zero I can mark it anything I waaaaaaant!