Serious delinquency on non-owner occupied residential properties is driving defaults in states with the fastest rising delinquency. Interestingly, the ratio of rental properties on delinquent loans is lower for subprime than for prime.
The was the conclusion announced by the Mortgage Bankers Association today.
Nearly one-third of prime loans in Nevada that were delinquent at least 90 days as of June 30 were investor properties, MBA reported. Almost one-quarter of delinquent subprime loans in the Silver State were non-owner occupied.
The figure contrasts national numbers, which reportedly indicate only 16 percent of prime mortgage defaults and 12 percent of subprime defaults were on rental properties.
Investor loans accounted for 26 percent of delinquent prime loans and 18 percent of subprime loans in the state of Arizona, according to the statement. More than one-fifth of California's delinquent prime mortgages were non-owner occupied while the figure was 15 percent for subprime.
"Arizona and California are also among the states facing the fastest increases in delinquent loans in the country," MBA said.
One-quarter of delinquent prime loans in Florida were investor owned, while 14 percent of its delinquent subprime loans were not occupied by the owner, according to the announcement.
MBA Chief Economist Doug Duncan noted in the press release that it is not always homeowners losing their primary residence that is behind rising defaults though it "is often the case of an investor gambling on a continued increase in home values and losing that gamble."
"California, Nevada, Arizona and Florida were among the states with the fastest home price appreciation over the last five years," Duncan added. "This rapid price appreciation attracted both speculators and home builders, a volatile combination that lead to an over-supply of homes that was beyond the capacity of the local populations to support."