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Even With All The Programs, Many Home Borrowers Beyond Help

AP

We’ve been talking a lot today about the latest delinquency numbers from the Mortgage Bankers Association and how the recession is going to affect foreclosures going forward. As one industry-type put it to me, we thought we were going to be seeing the light at the end of the tunnel by 2009, now we see a runaway freight train coming back at us.

So I decided to take a look at previous recessions and where the total delinquency rate stood. In 2001, during the one-year recession, the rate was around 5.35 percent of all loans delinquent with about 1.3 percent in foreclosure. In the 1990-91 recession, the delinquencies were about the same 5.2 percent, but the foreclosure inventory at .95 percent. Finally, during the 1981-82 recession, again the delinquencies were about the same, around 5.25-5.35 percent delinquent, but far fewer, just .44 percent in foreclosure.

Interestingly, the last time we saw a delinquency even close to today was back in the first quarter of 1985. 6.07 percent. No recession, but a big oil crash in Texas, Oklahoma, Louisiana and Colorado. You could compare that to the four big states in today’s crisis, California, Florida, Arizona and Nevada, but the start contrast now is that we have a nationwide recession.

    • Mortgage Delinquencies, Foreclosures at Record Highs

So why am I boring you with all these numbers? Well, officially our recession has been going on for a year now, but it’s expected to deepen into 2009. With the delinquency rate now at nearly 7 percent and the foreclosure inventory 2.97 percent, we are starting at a baseline of delinquencies so much higher than any previous recession (I don’t have the delinquency numbers from the Great Depression because they don’t exist at the MBA).

Even with all the programs out their to try to help troubled borrowers, the chief economist at the MBA told me today that about 40 percent of borrowers simply can’t be helped because they’re either too far underwater on their loans and have no jobs, or they’ve already abandoned the home and can’t be found.

  • Mortgage Rates Plunge
  • Bailouts Focus on Housing
  • Mortgage Rate Fall Won't End Housing Slump
  • The housing market and the recession are both feeding off each other, or, dare I say, starving due to each other. I believe it was Tolstoy who said, “What is to be done?”

    Questions? Comments? RealtyCheck@cnbc.com

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    • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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