TRENDS IN DELINQUENCIES AND FORECLOSURES IN ARIZONA

Community Development ResearchFederal Reserve Bank of San Francisco

September 2010

National Trends

According to John Williams, Director of Research at the FRBSF, the economic outlook is for a slow and modest recovery Unemployment still a major concern, and unlikely to see

significant drops in the unemployment rate in the next year While the housing market appears to be stabilizing, recovery

is muted, and construction starts and home sales are both down in the most recent period

Growth of real gross domestic product (GDP), the broadest measure of the strength of the economy, is hovering around 2 percent in the current quarter

Large “shadow” inventory of properties in delinquency or some stage of the foreclosure process also remains a concern

National Trends

Unemployment continues to hover around 10%

Source: Bureau of Labor Statistics, September 2010

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8.0

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Recession

U.S. Unemployment Rate

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Depth of this economic downturn eclipses past recessions

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Months of Recession

1980 1974 1981 1990

2008

2001

Case-Shiller shows tepid housing recovery

Source: Case - Shiller Home Price Index

100

120

140

160

180

200

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Case-Shiller National House Price Index(2000 = 100, Quarterly)

FHFA House Price Index continues to fall, reflecting activity at lower end of market

Source: Federal Housing Finance Agency (formerly OFHEO)

FHFA

Hou

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100

90

100

110

120

130

140

150

160

170

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FHFA (formerly OFHEO) House Price Index (2000=100, quarterly)

Overall delinquencies drop, but still more than 4.5 million homes in distress

Source: Mortgage Bankers Association, National Delinquency Survey

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Loans in Foreclosure All Mortgages Past Due

HAMP modifications down slightly in July; borrowers still face challenges in obtaining permanent modifications

Source: HAMP Service Performance Report Through July 2010

Loan

Mod

ifica

tions

0

20,000

40,000

60,000

80,000

100,000

120,000

November 2009

December 2009

January 2010

February 2010

March 2010 April 2010 May 2010 June 2010 July 2010

New HAMP Trials Started New Permanent Modifications Started

Arizona Trends

Arizona’s unemployment rate holding steady at 9.6 percent

Source: Bureau of Labor Statistics

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2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Recession

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United States

Arizona

Unemployment rates in Arizona vary by county

Source: Bureau of Labor Statistics, July 2010

Arizona seeing continued decline in house prices

Source: Federal Housing Finance Agency (formerly OFHEO)

FHFA

Hou

se P

rice

Inde

x20

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100

90

110

130

150

170

190

210

230

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FHFA (formerly OFHEO) House Price Index (2000=100, quarterly)

United States

Arizona

No signs of stabilization in the major metropolitan areas

Source: Federal Housing Finance Agency (formerly OFHEO)

FHFA

Hou

se P

rice

Inde

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100

90

110

130

150

170

190

210

230

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

FHFA (formerly OFHEO) House Price Index(2000 = 100)

Tucson

Yuma

Flagstaff

Phoenix-Mesa

The number of distressed properties – delinquent and in foreclosure – seems to be stabilizing

Source: Mortgage Bankers Association, National Delinquency Survey

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

2005 2006 2007 2008 2009 2010

Loans in Foreclosure: Arizona All Mortgages Past Due: Arizona

Arizona Foreclosure Data Maps

Areas Affected by Concentrated ForeclosuresFebruary 2010

Arizona Data Maps

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Areas Affected by Concentrated ForeclosuresJuly 2010

Arizona Data Maps

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Areas At Risk Of Additional ForeclosuresFebruary 2010

Arizona Data Maps

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Areas At Risk Of Additional ForeclosuresJuly 2010

Arizona Data Maps

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Phoenix Data Maps

Areas Affected by Concentrated ForeclosuresFebruary 2010

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Phoenix Data Maps

Areas Affected by Concentrated ForeclosuresJuly 2010

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Phoenix Data Maps

Areas at Risk of Additional ForeclosuresFebruary 2010

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Phoenix Data Maps

Areas at Risk of Additional ForeclosuresJuly 2010

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Oregon Data MapsTucson Area Data Maps

Areas Affected by Concentrated ForeclosuresFebruary 2010

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Oregon Data MapsTucson Area Data Maps

Areas Affected by Concentrated ForeclosuresJuly 2010

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Areas at Risk of Additional ForeclosuresFebruary 2010

Tucson Area Data Maps

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Areas at Risk of Additional ForeclosuresJuly 2010

Tucson Area Data Maps

Source: Lender Processing Services Inc. Applied Analytics & FRBSF Calculations

Conclusions

Continued Need for Foreclosure Prevention

Important to reach borrowers with ‘preventable’ foreclosures Borrower Outreach Events Expand use of foreclosure prevention workbook

http://www.pima.gov/current/2008_November%20English%20Workbook.pdf

Making Homes Affordable Federal program provides both loan modification and

refinance optionsOnline form available that allows borrowers to assess if they

qualify for the program http://makinghomeaffordable.gov/eligibility.html

Preventing Foreclosure Scams

Foreclosure scams are proliferating, especially in markets with investor interest Some counties are sending notices to all delinquent

borrowers to warn them about foreclosure scams Free media kit available from the Federal Reserve which

includes a PSA and other resources: http://www.federalreserveeducation.org/pfed/mediakit.cfm

NeighborWorks PSA: http://www.youtube.com/nwpad Other 5 Tip brochures and resources available from the

Federal Reserve http://www.federalreserve.gov/consumerinfo/fivetips.htm

Stabilizing Communities and Helping Families After Foreclosure

Develop service delivery and resources for families who go through foreclosure Rental housing assistance Credit repair Minimizing disruption for children (e.g. allowing them to

finish the school year in their old school) Minimize negative spillover effects of vacant properties

on surrounding neighborhood Ensure servicer maintenance of REOs Work with lenders/servicers to acquire and rehab

foreclosures for affordable housing

For More Information: FRBSF Community Development Website

Links to other resources and research on foreclosure trends and mitigation strategies

All publications, presentations available on our website

Conference materials also posted shortly after events

http://www.frbsf.org/community/