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Signs. It seems everywhere you turn Rhode Islanders are looking for signs. Signs of improvement in our job market. Signs of an upward trend in the real estate market. Signs of real economic recovery.
There are many recent signs that show we are on a slow, but steady path towards a stable economy. Yet, there are still many Rhode Islanders struggling, and unfortunately those same signs tell us that, for some, things are going to get worse before they get better.
According to the Mortgage Bankers Association’s quarterly National Delinquency Survey, 30- and 60-day delinquencies are trending downward in Rhode Island, as well as across the country. This suggests a positive trend, in that fewer new borrowers are becoming delinquent because the unemployment rate and the economy in general are stabilizing.
However, delinquencies over 90 days continue to grow – the rate increasing since fourth quarter ‘09. This is mainly because those who were in trouble continue to get into deeper trouble. And, although unemployment has stabilized, rehiring has not picked up enough to help people recover from major debt.
Foreclosures since first quarter ‘09 have picked up dramatically, while the report also shows that foreclosures since the fourth quarter ‘09 have dropped a little. The lull looks to be more of a pause as many factors have come together, including new federal, state and local laws; a moratorium on foreclosures; and computer and operating systems upgrades in large banks and servicers. However, we expect the result of these mitigating factors to lead to a spike in foreclosures later this year, as servicers become more efficient in processing delinquent loans. Hopefully, that new environment will also result in faster answers on new workouts.
As many Rhode Islanders continue to battle our state’s struggling job market, the rate of decline has slowed and we are not losing jobs at the alarming rate that we were experiencing just a few short months ago. The road remains long, but we’re headed in the right direction. As the job market improves, so too will the real estate market. In fact, we’ve known that jobs lag behind many other indicators, as it takes time for companies to recover, gear up and begin to grow again.
And then comes housing – typically one of the last things to recover. As housing effects the economy in general – a strong housing market leads to a strong economy – so too is housing affected by economic crisis. We’ve seen the results, as foreclosures have had devastating effects on our economy, our neighborhoods, and now our stock of safe, affordable homes.
But once again, there is more help on the horizon for Rhode Islanders in housing trouble. Thanks to the steadfast commitment of our congressional delegation, Rhode Island will receive $43 million in federal stimulus dollars under the Emergency Economic Stimulus Act of 2008 to protect more Rhode Islanders from foreclosure. Together with a working group of partners, Rhode Island Housing devised plans to best utilize the funds and recently submitted the plans to the U.S. Department of Treasury for approval. As we await approval and availability of these funds, we are urging those in need of assistance to contact our HelpCenter at the first sign of trouble. Early intervention is key. Our trained HelpCenter counselors can begin the process of seeking mortgage solutions and get a head start on potentially receiving financial assistance.
Things will get better. Getting over the hump isn’t going to be easy, but together with our partners, we remain committed to creating a safe, healthy future for our state.
Richard Godfrey
Executive Director
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