Foreclosure Trends

May 25, 2011

There has been much discussion in the media about the improving conditions of the U.S. housing market. As the graph through April 30, 2011 indicates, the rate of new foreclosures is decreasing, the rise in number of significantly delinquent loans has tapered off, and residential construction spending appears to have bottomed out.

Unfortunately, the data does not indicate that all of the U.S. housing market problems are behind us. According to Lender Processing Services, foreclosure inventories on March 31, 2011 reached 8 times historical norms. Additionally, the average days payments were delinquent for properties in foreclosure was 549 compared to 251 in early 2008. As home prices continue to decrease, lenders appear to be showing an increased willingness to modify loans or ignore delinquency in their efforts to spread out the realization of their losses on the sale of foreclosed properties. While this is good news for some delinquent borrowers, it should serve as a reminder of the fragility of the U.S. economy amid the exuberance over strong corporate profits.

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

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