Kulakowski 201005PMC
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2010PMC on homeowners strategically defaulting (or not yet doing so).
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Kulakowski 201005PMC
- 1. Separating Fact from Fiction:! Public Perception & Mortgage Crisis! Susan Kulakowski!
- 2. Presented at the! 2010 Predictive Methods Conference! Wednesday, May 19, 2010! Laguna Nigel, CA!
- 3. About Google Trends! ⯠Shows search volume over time by geographic region.! ⯠Measures volume relative to a single search term.! ⯠Provides a graph, Search Volume Index, and exportable data.! www.linkedin.com/in/skulakowski | 2010PMC!
- 4. âSubprime 25! Mortgagesâ! 20! ⯠March 2007 15! peak! 10! ⯠Relative to âFinancial 5! Crisisâ! ⯠Source: 0! Google Trends! Jul-04! Jul-05! Jul-06! Jul-07! Jul-08! Jul-09! Jan-04! Jan-05! Jan-06! Jan-07! Jan-08! Jan-09! Jan-10! www.linkedin.com/in/skulakowski | 2010PMC!
- 5. âFinancial 25! Crisisâ! 20! 15! ⯠Sept. 2008 10! peak! ⯠Source: 5! Google Trends! 0! Jul-04! Jul-05! Jul-06! Jul-07! Jul-08! Jul-09! Jan-04! Jan-05! Jan-06! Jan-07! Jan-08! Jan-09! Jan-10! www.linkedin.com/in/skulakowski | 2010PMC!
- 6. 90! âBail Outâ! 80! 70! 60! 50! ⯠Sept. 2008 40! peak! 30! 20! ⯠Source: Google Trends! 10! 0! Jul-04! Jul-05! Jul-06! Jul-07! Jul-08! Jul-09! Jan-04! Jan-05! Jan-06! Jan-07! Jan-08! Jan-09! Jan-10! www.linkedin.com/in/skulakowski | 2010PMC!
- 7. The Big Names in 2008! (notice the change of scale)! 300! 250! 200! 150! 100! 50! 0! Mar-08! Jul-08! Nov-08! Mar-09! Jul-09! Nov-09! Jan-08! May-08! Sep-08! Jan-09! May-09! Sep-09! AIG! Lehman! WAMU! www.linkedin.com/in/skulakowski | 2010PMC!
- 8. The various crises, 2007 to present, held our attention for a moment.! www.linkedin.com/in/skulakowski | 2010PMC!
- 9. We have the attention span of gnats.*! *As of April, 2010, SourceWatch estimates $4.6 trillion bailout funds disbursed with $1.99 trillion still outstanding.! http://www.sourcewatch.org! www.linkedin.com/in/skulakowski | 2010PMC!
- 10. Maybe weâre not worried about Wall Street bonuses but worried about our own homesâŠ! www.linkedin.com/in/skulakowski | 2010PMC!
- 11. Total Mortgages, Homeowners & Households! 110.0! 75.5! Mortgages! 51.6! Homeowners! Households! Source: DB! (millions)! www.linkedin.com/in/skulakowski | 2010PMC!
- 12. Estimates of Underwater Mortgages! 51.6! Mortgages! CoreLogic ('08Q4)! 25.0! Eco.com 17.5! ('10Q1)! 11.0! DB ('11Q1)! Source: DB! (millions)! www.linkedin.com/in/skulakowski | 2010PMC!
- 13. Estimates of Underwater Mortgages! $11,030! Fed Reserve 2008! CoreLogic ('08Q4)! $5,344! Eco.com $3,741! ('10Q1)! $2,351! DB ('11Q1)! Source: DB! ($billions)! www.linkedin.com/in/skulakowski | 2010PMC!
- 14. Range of 12mo Change in S&P/CS Indices! 60%! 45%! 30%! 15%! 0%! -15%! -30%! -45%! to Jan-01! to Jan-03! to Jan-05! to Jan-06! to Jan-09! to Jan-10! to Jan-00! to Jan-02! to Jan-04! to Jan-07! to Jan-08! Median! Source: S&P/CSI! www.linkedin.com/in/skulakowski | 2010PMC!
- 15. Whether 20% of mortgages are underwaterâor 50%â weâre in trouble.! www.linkedin.com/in/skulakowski | 2010PMC!
- 16. Which brings up the question ofâŠ! www.linkedin.com/in/skulakowski | 2010PMC!
- 17. Moral Hazard! If you are facing or considering foreclosure, you're not alone.! You Have OptionsâŠ! Source: www.YouWalkAway.com! www.linkedin.com/in/skulakowski | 2010PMC!
- 18. Your Options! Source: www.YouWalkAway.com! www.linkedin.com/in/skulakowski | 2010PMC!
- 19. Your Options! With an on-line calculator provided! Source: www.YouWalkAway.com! www.linkedin.com/in/skulakowski | 2010PMC!
- 20. Good news for lenders:! Not many homeowners just walk away.! www.linkedin.com/in/skulakowski | 2010PMC!
- 21. Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis ! Brent T. White! University of Arizona! James E. Rogers College of Law! www.linkedin.com/in/skulakowski | 2010PMC!
- 22. According to WhiteâŠ! Indeed, though more than 34% of U.S. homeowners were underwater on their mortgages by the end of the third quarter of 2009, www.linkedin.com/in/skulakowski | 2010PMC!
- 23. the strategic default rate was only 2.5% to 3.5%. based on analysis of Mortgage Bankers Association and RealtyTrak data, mid-2009.! www.linkedin.com/in/skulakowski | 2010PMC!
- 24. Why arenât more homeowners walking?! ⯠Individually! ⯠They canât do the math! ⯠(If they could do the math, perhaps they wouldnât have taken the mortgage in the ïŹrst place.)! www.linkedin.com/in/skulakowski | 2010PMC!
- 25. Why arenât more homeowners walking?! ⯠Individually! ⯠They feel ashamed and afraid! www.linkedin.com/in/skulakowski | 2010PMC!
- 26. Why arenât more homeowners walking?! ⯠By the wayâŠ! ⯠The ïŹnancially sound decision may be to strategically default.! ⯠For-proïŹt ïŹrms, protecting shareholders, evaluate this option all the time.! www.linkedin.com/in/skulakowski | 2010PMC!
- 27. Why arenât more homeowners walking?! ⯠Structurally! ⯠Disparity between knowledge of lenders/servicers and borrowers! ⯠Disparity between resources of lenders/servicers and borrowers! ⯠Credit bureaus as enforcers! www.linkedin.com/in/skulakowski | 2010PMC!
- 28. But homeowners do defaultâŠ! www.linkedin.com/in/skulakowski | 2010PMC!
- 29. âŠthe default rate much more closely resembl[es] the unemployment rate than the percent underwater⊠Source: White! www.linkedin.com/in/skulakowski | 2010PMC!
- 30. Delinquencies track Unemployment! %Under- Seriously Unemploy- water Delinqât ment Merced, 85 18.99 17.5 CA Las Vegas- 81 15.33 11.3 Paradise Port St. 79 17.30 14.1 Lucie, FL Source: White! Whiteâs paper includes additional MSAs! www.linkedin.com/in/skulakowski | 2010PMC!
- 31. Bad news for lenders:! Homeowners default when they lose jobs.*! *According to BLS, there were 15 million unemployed workers looking for work in March 2010.! www.linkedin.com/in/skulakowski | 2010PMC!
- 32. Unemployment Rate! (BLS, seasonally adjusted)! 12%! 9%! 6%! 3%! 0%! Jan-04! May-04! Sep-04! Jan-05! May-05! Sep-05! Jan-06! May-06! Sep-06! Jan-07! May-07! Sep-07! Jan-08! May-08! Sep-08! Jan-09! May-09! Sep-09! Jan-10! U3 Rate: Actively Seeking Employment! www.linkedin.com/in/skulakowski | 2010PMC!
- 33. Bad news for lenders:! The number of âmarginally attachedâ and part-time workers is growing at a faster rate.! www.linkedin.com/in/skulakowski | 2010PMC!
- 34. Unemployment Rates! (BLS, seasonally adjusted)! 20%! 15%! 10%! 5%! 0%! Jan-04! May-04! Sep-04! Jan-05! May-05! Sep-05! Jan-06! May-06! Sep-06! Jan-07! May-07! Sep-07! Jan-08! May-08! Sep-08! Jan-09! May-09! Sep-09! Jan-10! U3 Unemployment Rate! U6 (inc. "marginally attached" and part-time workers)! www.linkedin.com/in/skulakowski | 2010PMC!
- 35. The unemployment rate has our sustained attention.! www.linkedin.com/in/skulakowski | 2010PMC!
- 36. Unemployment Rates & Google Trends! 20%! 250! 15%! 200! 150! 10%! 100! 5%! 50! 0%! 0! Nov-04! Dec-06! Nov-09! Jan-04! Jun-04! Sep-05! Feb-06! May-07! Oct-07! Aug-08! Jan-09! Jun-09! Apr-05! Jul-06! Mar-08! U3 Unemployment Rate! U6 (inc. "marginally attached" and part-time workers)! Unemployment Google Trends! www.linkedin.com/in/skulakowski | 2010PMC!
- 37. Be afraid, not of homeowners just walking away.! www.linkedin.com/in/skulakowski | 2010PMC!
- 38. Be afraid of ! falling home prices.! www.linkedin.com/in/skulakowski | 2010PMC!
- 39. Be afraid of ! continuing job losses.! www.linkedin.com/in/skulakowski | 2010PMC!
- 40. Be very afraid of falling home prices coupled with continuing job losses.! www.linkedin.com/in/skulakowski | 2010PMC!
- 41. Together, they may force many more homeowners to walk.! www.linkedin.com/in/skulakowski | 2010PMC!