My friend Keith Jurow sent me some interesting data the other day. Jurow is a housing market analyst and real estate expert who authors the Housing Market Report for Minyanville. A former senior economic writer for Holt Investment Advisory of Westport, Connecticut, Jurow is a graduate of Cornell University, received an M.A. and Ph.D. from the New School in Manhattan, and taught on the undergraduate level for more than a decade. He writes:
"I just received the updated second quarter serious delinquency stats...truly scary. More than 400,000 seriously delinquent owner-occupied properties just in NYC and Long Island. Almost none of them have been put into foreclosure. Sooner or later, the banks have to start acting on them. When they do, home prices collapse throughout the NYC metro area -- 19 million people. I am as certain of that as I am that the sun will rise tomorrow morning."
Jurow sent me a table showing the cumulative totals through June of serious delinquent owner-occupants in NYC and Long Island who received pre-foreclosure notices from their mortgage servicer. A 2009 New York state statute requires all mortgage servicers to send these notices to all owner-occupant borrowers who are delinquent more than 30 days on their mortgage. The law requires that servicers send a “pre-foreclosure notice” at least 90 days before the servicing bank may commence any foreclosure proceedings. The act does not require notices to be sent to investor-owned properties nor for properties known to be vacant.
The table won't fit nicely into this blog post, but I'll put anyone who would like to see if in touch with Jurow. I found particularly interesting the number of statewide delinquencies that fall within the seven counties surrounding NYC (Bronx, Kings, Nassau, New York, Queens, Richmond and Suffolk) compared to the rest of the state as a whole. Over 53% of all foreclosure notices issued in thge country went to homeowners in one of those seven counties, accounting for 405,156 out of 754,923 notices issued statewide.
If Keith is right, this is a very scary situation that banks in and around New York City are being very quiet about. I asked him about the likelihood that these delinquencies would cure.
"I have posted charts in my articles which show that after a property goes delinquent more than 60 days, 95% of them will not become current again. This means that some action against the borrower will have to be taken at some point in the future," Jurow said. "The only real exception is those delinquent owners who receive some kind of mortgage modification. But we have very good data from OCC and Hope Now which show that over 50% of all mortgages that were modified have become delinquent again."
Jurow says that his data indicate that over 30% of all first liens in NYC and Long Island are now seriously delinquent yet have not entered foreclosure.
"For two years, I've been saying that the banks can't keep extending and pretending indefinitely. Once they start to take some action -- either foreclosure or a short sale -- prices in the entire NYC metro area will collapse."