Economy Watch: Residential Delinquencies Edge Down
- Aug 27, 2010
August 27, 2010
By Dees Stribling, Contributing Editor
The delinquency rate for mortgage loans on one-to-four-unit residential properties dropped to a seasonally adjusted rate of 9.85 percent at the end of the second quarter of 2010, according to the latest Mortgage Bankers Association’s National Delinquency Survey, which was released Thursday. That’s a decrease of 21 basis points from the first quarter of 2010, but an increase of 61 basis points compared with 2Q09.
The delinquency rate includes loans that are at least one payment past due but not those in the process of foreclosure. The percentage of loans in the foreclosure process at the end of 2Q10 was 4.57 percent, a decrease of a scant six basis points from the first quarter, but an increase of 27 basis points 2Q09.
“The good news is that foreclosure starts are down and the inventory of homes anywhere in the process of foreclosure fell for the first time since 2006, and had the largest drop since 2005,” said Jay Brinkmann, MBA’s chief economist, in a statement. On the other hand, he added, “the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story. Only when we see a consistent increase in employment will we see an increase in sales and starts, and a sustained improvement in the delinquency numbers.”
Bankruptcy Looms for Blockbuster
The end of a retail era is near. According to The Los Angeles Times on Thursday, Blockbuster Inc. is getting all its ducks in a row with the movie studios so that it can file bankruptcy next month. The video rental chain has been bleeding money all year ($1 billion in red ink so far), and had the added indignity of having its stock delisted this summer.
A post-bankruptcy future for the retailer will see it looking a lot less like a retailer. “Multiplatform distribution strategy” is the buzzword used to describe how the previous king of video rental might refashion itself: a future video rental by mail (like Netflix), kiosk (like Redbox), on-demand (like every cable provider) and via other outlets. The company also hopes to use the bankruptcy filing as a tool to dump at least 500 leases, according to the newspaper. Currently the company has more than 3,400 stores.
Dallas-based Blockbuster will try, at least, not to go the way of Movie Gallery Inc. and its Hollywood Video brand, once the number-two video rental chain. That company and its retail operations bit the dust earlier this year
Jobless Claims Dip, But Employment Outlook Still Cloudy
For the week ending August 21, initial unemployment claims dropped 31,000 from the previous week, from 504,000 to 473,000, according to the U.S. Department of Labor. This was the first weekly drop in more than a month, down from a nine-month high, but it isn’t enough to affect the overall U.S. unemployment rate.
In July, the U.S. economy shed about 131,000 jobs, but a lot of those were Census Bureau positions not designed to last. Among private employers, 71,000 jobs were added. Not bad, perhaps, but 100,000 new jobs a month is widely considered the benchmark of a genuine recovery.
After its mild Wednesday recovery, Wall Street took another hit on Thursday, with the Dow Jones Industrial Average down below the psychologically important 10,000 mark for the first time in nearly two months. The DJIA lost 74.25 points, or 0.74 percent, ending at 9,985.81. The S&P 500 was down 0.77 percent and the Nasdaq declined 1.07 percent.