The percentage of wealthier homeowners who are delinquent two months or more on prime, jumbo mortgages tripled in 2009to nearly ten percent, according to the latest data from Fitch Ratings.
The report is yet another sign that the housing crisis and the negative equity it has caused is climbing upscale to some of the wealthiest neighborhoods in America. Should the trend continue, foreclosure yard sales will become commonplace in the cul de sacs and gated neighborhoods of the nation’s most exclusive communities.
California and Florida are leading the way. The five states with the highest volume of prime jumbo loans outstanding (California, New York, Florida, Virginia, and New Jersey)account for approximately two-thirds of the delinquencies.
Prime jumbo 60 days plus delinquencies for these states are: California, 10.8 percent, up from 3.5 percent in 2008; New York, 5.8 percent, up from 1.8 percent; Florida, 16 percent, up from 7.3 percent; Virginia, 5.4% percent, up from 2.3 percent; and New Jersey, 7.1 percent, up from 2.3 percent.
Despite some improvement in home prices and a slowdown in employment loss, roll rates have not improved primarily due to the number of prime jumbo borrowers who owe more on their mortgages than their home is worth. ‘Over one-third of prime jumbo borrowers that are current on their mortgages also are ‘underwater’ on their mortgages,’ said Fitch Managing Director Vincent Barberio.