Severe delinquencies among mortgage holders increased more than 50 % from year-ago levels during the third quarter, according to data released Tuesday morning by credit reporting agency Trans Union LLC. At the end of Q3, 3.96 % of homeowners were 60+ days in arrears, compared to 2.56 % one year earlier; historically, the severe delinquency rate has held the line at roughly 2%.  No more. Not in the face of a housing and mortgage mess that, as of yet, shows little sign of slowing down. And with the nation’s recession already 1 year old — longer than the average length of most prior recessions — it might be time to ask if strategies employed thus far by government officials and lawmakers in the name of helping bolster the economy might be doing more harm than good.  “It’s nothing short of staggering,” Ezra Becker, principal consultant in Trans Union’s financial services group, told the Associated Press.  Staggering, perhaps. But certainly not surprising, given the recent mortgage news and the wealth of data we’ve already seen suggesting fundamental imbalances remaining in key housing markets nationwide.  Mortgage loan modifications are being approved by mortgage lenders quicker than traditional refinancing.The agency also said that severe delinquencies could reach as high as 4.7% before this year is out, an estimate that reflects the effect of job loss and an extended recession.

The culprit here shouldn’t surprise, if you’ve read HW for any meaningful period of time; a looming group of resets is staring down the mortgage market, many outside the subprime sector and many underwritten on 2 and 3-year timeframes. With an estimated 7.6 million U.S. households currently owing more on their home than it is worth, according to a recent study by First American CoreLogic, very few of these households will be able to refinance, even if incomes remain stable.  “There are a lot more loans that will be resetting throughout 2009 through 2011,” Becker told the Wall Street Journal. “There may be an ongoing flow of consumers who may now be able to pay their mortgage but may not be able to a year from now.”  Also not surprising is where those delinquencies are likely to be located — Florida, Nevada, California, and Arizona, to be more specific. All four states were among the most unsustainably overheated during the recent run-up in real estate prices; Trans Union said it now expects as many as 7.8% of homeowners in Florida to be delinquent by the end of this year, and another 7.7% of Nevada borrowers to find themselves in a similar position.  Read complete article  - Article written by Paul Jackson-