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Mortgage Delinquency Problems Behind Us? Perhaps Not
The 3rd Quarter FDIC Bank Reg data is available and a review of the top 1-4 Family First Liens loan portfolios reveals some interesting highlights:
1) Together BAC, WFC, JPM & C combine to make up 44.54% of the total loans for U.S. Regulated Depositories.
2) Well Fargo has the highest 30+ Days Past due delinquency rate sitting at 16.05%. This is up from 14.23% last quarter. Now, I know that all the WFC apologists are going to eschew this data point and say it's a WB issue, but if you look at WFC prior to WB you'll note that they had a rate of 12.80% in Q3 of 2008. When WB came on the books in Q4 the rate actually fell to 12.26% - indicating that WB had a lower delinquency rate at that time than WFC.
3) Right behind WFC is JPMorgan Chase sitting at 14.08%. In the 2nd Quarter, JPM was at 12.98%.
4) Citigroup had the highest 30-89 days past due delinquency rate at 6.02%.
The delinquency rate data in a chart:
Now, it's important to note that this is Bank Reg data and may or may not reflect GAAP Financial position. It's entirely possible, although I'm not of the opinion, that financially these institutions may be okay regarding this loan portfolio.
Of a larger concern to the general argument that things have turned should be the acceleration in the 30-89 days past due rate of the four. With the exception of JPM, the other 3 lenders all experienced an increase in their early stage delinquency rates:
This is extremely concerning for the fact that this represents the first time in a couple of quarters that Early Stage delinquencies increased. BAC went from a delinquency rate of 3.32% to 3.54% - an increase of 6.63%. WFC was right in line with BAC at 6.24%.
Citigroup experienced the highest increase in their rate (15.33%) going from 5.22% to 6.02%.
For anyone trying to forecast the "peak" in 1-4 Family First Liens Charge Offs this number should give them heartache. View the charge off bubble as a snake eating a pig. When we see a noticeable drop off in Early Stage that indicates the pig is entirely in and it's just a matter of time as we work the pig thru.
What the increase in Early Stage indicates is that maybe the pig isn't all the way in. Yes, a vivid description, but apt in so many ways.
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Does anyone have data as to the amount and trend of the recoveries against charge-offs?
JEZUS.
IT IS NOT the delinquencies folks.
LOOK AT THE RECOVERIES AGAINST CHARGE OFFS!
BOOOOOOOOOOOOOOOOOOOOM!
Hey, we're only in the 4th inning here. Wait until Alt-A and Option ARMS start ramping up mid 2010 through mid 2012. Good times!
The Housing Crisis and Wall Street Shame
Wall Street is booming again in large part because the rest of America — categories (1) and (2), above — bailed it out to the tune of $700 billion last year. The Street has repaid some of that but, according to the bailout program’s inspector general, much of it is gone forever. For example, the taxpayer money that bailed out giant insurer AIG went directly through AIG (AIG) to its “counterparties” like Goldman Sachs — to whom Tim Geithner, according to the inspector general, gave away the store. As Goldman Sachs prepares to dole out some $17 billion to its executives and traders, it’s worth noting that Goldman received $13 billion a year ago from the rest of us via AIG and Geithner, no strings attached.
Shame? For Wall Street, it all comes down to PR, at minimal cost. Goldman Sachs, attempting to preempt a firestorm of public outrage when it dispenses its $17 billion of bonuses, is setting up a crudely conceived $500 million PR program to help Main Street.
http://wallstreetpit.com/12494-the-housing-crisis-and-wall-street-shame
Good point about the WB rate in Q4-08. It's not just the bad fruit from a diseased tree that's spiking the distress for WFC.
No worries. I'm sure all of these loans have PMI.
Green Sharts - the data comes from the Quarterly Call Reports aggregate download at the FDIC.gov site. It is "monstrous" indeed, but I've been working with Bank Reg data for 7 years so have a enough knowledge to get around.
The government backed mortgage data is available and will be part of the next update to www.wlmlab.com in a few months.
Very good analysis bmoreland. Where did you get the data on the mortgage delinquency rates for the big 4 banks, from their 10-Qs? I could only find summary data or monstrous downloads at the FDIC website.
Extremely good question on the government backed mortages.
First off, the 1-4 Family First Liens data comes the Quarterly Call reports at the www.fdic.gov. I get the cert level data from the "monstrous downloads". I then aggregate to the Holding Company level.
I do not believe the government backed data was available when I first built the site earlier this year. It is available now and will be included when I roll out an update in a few months.
Thanks for the response. So I was in the right place, but that's quite a bit more data than I want to figure out how to deal with for an occasional analysis. I appreciate you posting it.
I edited my post because I couldn't get a link to work and cut the question about agency backed mortgages. So I gather from your response that agencies are included in the total mortgage loans and delinquency percentages for the 4 banks but you'll soon be able to separate it and get a better look at their real credit exposure from first mortgages. The information is in the 10-Qs of each bank but it's obviously easier to pull it in one place where it is reported on the same metrics for each bank.
As I'm sure you know, the FDIC website has statistics on delinquent mortgage loans across all commercial banks in the "credit quality" area. The %'s for the last 4 quarters are 4.83%, 6.17%, 7.17% and 8.56%. Based on what I've seen in presentations of private label MBS statistics from Jeff Gundlach of the TCW group, while delinquency rates on subprime have stabilized in the low 40's, delinquencies on Alt-A and Prime are moving up every quarter. Bank mortgages would be heavily skewed toward Prime and Alt-A, which are much greater in number and market value than subprime.
It is somewhat amazing to me that the new home and existing home sales numbers each month, which are skewed upward by the first time homebuyer credit, cheap subprime quality FHA loans and foreclosure/short sales, get so much more attention than this continued climb in mortgage delinquency rates. Not only that, but there is the pig in the python issue with the number of new defaults through foreclosures is still growing faster than houses coming out of foreclosure. And then there's the fact that 90%+ of new mortgage originations are now insured by the taxpayers (Fannie, Freddie, FHA). Jumbo mortgages that banks originate and hold have gone from 9% of mortgage transactions a couple of years ago to 3%. So the high end market remains dead.
How anybody can look at all of the data and think housing prices have bottomed is beyond me.
those in the know, know prices have not bottomed. but those that can (NAR, gov, realtors, CNBS) will spin data to get John Q Public to get off their asses now and go buy a house -- "we are near the bottom and this is the deal of a lifetime". and the fed's got their back. so while this is great analysis by bmorland -- it doesn't matter what the real figures are!
because those listed above have the channels/airwaves to alter psychology we all live in a lie.
i've yet to see anyone with the guts, knowledge and channels (besides blogs that reach hundreds of people instead of millions)reveal the truth and challenge the cartel.
what will the turning point be?
Do you have a mortgage or credit card with Bank Of America?
Employee: I thought if I made the credit card payment affordable, there wouldn't be a charge-off. (hey there's an idea)
Bank Of America to Employee:
You have a lot of integrity. You help customers with work-outs. Now leave, you're fired !!!
http://www.youtube.com/watch?v=a5E0WNO7e_Q
Apt indeed - the snake is going to pass the pig all over us.
It's not a pig, it's a Winnebago