TRENDS IN DELINQUENCIES AND FORECLOSURES IN ARIZONA

Community Development ResearchFederal Reserve Bank of San Francisco

January 2011

National Trends

Even though NBER officially announced the recession’s end in June of 2009, pace of recovery remains slow Unemployment rate in November rose to 9.8% from 9.6%,

demonstrating continued weakness in the labor market On the more positive side, the private sector has been adding jobs

each month, and part of the rise in unemployment is due to an increase in the labor force-that is, the number of people who started looking for work

Housing is the one major sector of the economy where we still do not see signs of recovery New and existing home sales remain near historic lows, and

inventories of foreclosed homes remain very high Public sector budget crisis in many states is of major concern,

and threatens viability of services to LMI communities

National Trends

Unemployment continues to hover around 10%

Source: Bureau of Labor Statistics, November 2010

0

2

4

6

8

10

12

Recession

U.S. Unemployment Rate

Une

mpl

oym

entR

ate

Recovery, particularly in labor market, remains elusive

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48

Perc

ent D

eclin

e in

Em

ploy

men

t fro

m P

eak

Months Since Start of Recession to Employment Recovery

1980 1974 1981 1990

2008

2001

Source: Bureau of Labor Statistics, November 2010

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)

Case-Shiller Index shows continued softness in housing market

Source: Case - Shiller Home Price Index

FHFA House Price Index rises slightly in 3rd Qtr of 2010

FHFA

Hou

se P

rice

Inde

x20

00=

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)

Source: Federal Housing Finance Agency (formerly OFHEO), includes refinancing and is not seasonally adjusted

Nationally, delinquencies drop in 2010, but still more than 4.5 million homes in distress

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

All Mortgages Past Due Loans in Foreclosure

Source: Mortgage Bankers Association, National Delinquency Survey

Despite improvement, high rates of delinquency remain concentrated in western and southern states

Source: Lender Processing Service Inc. Applied Analytics, November 2010

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

0

20,000

40,000

60,000

80,000

100,000

120,000

November December January 2010

February March April May June July August September October

Mod

ifica

tions

New HAMP Trials Started New Permanent Modifications Started

Source: HAMP Service Performance Report Through October 2010

Household debt falling from 2008 peak

0

2

4

6

8

10

12

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Trill

ions

of

Dol

lars

Total Debt Balance and Composition

Mortgage Auto Loan Credit Card Student Loan

Source: Federal Reserve Bank of New York

Many states within 12th District face severe budget shortfalls

Total End-of-Year Shortfall as Percentage of 2010 Budget

Source: Data from Center for Budget and Policy Priorities

Arizona Trends

Arizona’s unemployment rate holding steady at 9.5 percent

Source: Bureau of Labor Statistics

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Recession

Une

mpl

oym

ent R

ate

United States

Arizona

Unemployment rates in Arizona vary by county

Source: Bureau of Labor Statistics, October 2010

Arizona seeing continued decline in house prices

Source: Federal Housing Finance Agency (formerly OFHEO)

FHFA

Hou

se P

rice

Inde

x20

00=

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

x20

00=

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

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

Num

ber

of M

ortg

ages

Loans in Foreclosure All Mortgages Past Due

Continued decline in number of delinquent mortgages, but number of properties in foreclosure process rises

Source: Mortgage Bankers Association, National Delinquency Survey

Average household debt in Arizona falling from peak in 2008

0

10

20

30

40

50

60

70

80

90

100

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Thou

sand

s of

Dol

lars

California

ArizonaNevada

US Average

Source: Federal Reserve Bank of NY Household debt includes: mortgage accounts, HE revolving accounts, auto loans, credit cards, and student loans

Arizona Foreclosure Data Maps

Areas Affected by Concentrated ForeclosuresJuly 2010

Arizona Data Maps

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

Areas Affected by Concentrated ForeclosuresNovember 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

Areas At Risk Of Additional ForeclosuresNovember 2010

Arizona Data Maps

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 Affected by Concentrated ForeclosuresNovember 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

Phoenix Data Maps

Areas at Risk of Additional ForeclosuresNovember 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

Oregon Data MapsTucson Area Data Maps

Areas Affected by Concentrated ForeclosuresNovember 2010

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

Areas at Risk of Additional ForeclosuresNovember 2010

Tucson Area Data Maps

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

Conclusions

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/