37% of homeowners did NOT make a mortgage payment on-time last month!

What??? How can that be? Well, it’s all in the numbers. This is a headline similar to nearly all of the news stories we read throughout 2008 regarding our mortgage crisis.

So how in the world can 37% of the nation’s homeowners NOT make an on-time mortgage payment last month? Well, it’s simple. What I haven’t mentioned yet is that according to the US Census Bureau’s American Housing Survey released September of last year, approximately 34% of American Homeowners own their home “free and clear” with no mortgage payment due… Hmmm.

The rest of the puzzle? According to Transunion, the percentage of mortgage payments that were ‘late’ last month was around 4% (which equates to about 3% of homeowners). So there you have it; 34% who made NO mortgage payment (thus the statement is true regarding NOT making an on time mortgage payment… or ANY mortgage payment) plus the other 3% equals 37%.

For years, again according to Transunion, the delinquency rate on mortgages has been about 2%, it just recently increased to 4% in the third quarter of last year. What did we hear? We heard that the delinquency rate DOUBLED. We didn’t hear that 96% of mortgages are being paid on time.

We can all debate as to WHY the news gets reported the way it does, especially in the last eighteen months. I guess it comes down to the old adage; “If it bleeds, it leads”. I firmly believe that the skewed reporting of exactly how ‘bad’ the news really was last year struck fear into all homeowners, and to the detriment of the nation’s real estate industry, all potential home buyers. They reported, people reacted, they reported the reaction, people reacted again. Etc…

It reminds me of a story I heard about an Indian Chief and a local Weather Service office:

The Indian Chief thought that he’d better start preparing for winter so he sent all the braves out to collect wood. As he watched them return laden with timber from the forest he suddenly felt that he ought to check his forecast so he phoned the local weather office."Tell me, is it going to be a bad winter?""Yes" said the forecaster "It will be a bad one"

So the Chief told the braves that they didn't have enough wood and sent them back into the forest again. They returned with more wood but once again the Chief had doubts and he called the forecaster to confirm."It is going to be a really severe winter" replied the forecaster.

The Chief look at the wood supply, decided that more was required and the braves were dispatched back in to forest. The Chief called the forecaster."Are you sure it's going to be a really severe winter""Look" said the forecaster "It’s definitely going to be the worst winter on record - the Indians are gathering wood like crazy!""

Am I naïve enough to really think that if things were reported differently we’d all be holding hands singing Kumbaya? Of course not! Would we still have had a decrease in the number of homes sold last year? Probably but I’d bet it wouldn’t have been near the 16% I spoke about on last Fridays blog (Wowie Zowie Uncle Howie).

For a quick and easy on-line evaluation of your home’s market value, log onto: http://www.billswanson.com/ or email me at Bill.Swanson@cbshome.com.