'Macroeconomic Issues to Affect Loan Performance'

Macroeconomic issues will have an effect on delinquencies and foreclosures, Mortgage Bankers Association chief economist Jay Brinkmann said during a press briefing at the group's annual convention in San Francisco. The recession may have started in the third quarter 2007 and it could last through the second quarter 2009. On a non-seasonally adjusted basis, it could take as long as 10 quarters before employment returns to pre-recession levels as the economy has shifted away from a manufacturing base, he said. The growing number of recently constructed properties going into foreclosure will affect 2009 housing starts, he said. MBA is projecting 2009 loan origination volume of $1.67 trillion, down from its estimate for 2008 of $1.86 trillion. Most of the decline will come in refinancings as that will drop from $949 billion in 2008 to $736 billion next year. Among the drivers of the market, Mr. Brinkmann said, could be sales of foreclosed properties in California and Florida to investors looking to rent them. Speaking of renters, there has been a buildup in rental households over the last two-and-one-half years, while there has been a decline in owner-occupied households. There could be a return of renters to the market that are able to qualify for loans at the lower prices, as long as they have good credit, he said.