Posted: Wednesday, June 4, 2008 7:00 pm
The equity Americans have in their most important asset — their homes — has dropped to its lowest level since the end of World War II.
Homeowners’ portion of equity slipped to 46.2 percent in the first quarter from a revised 47.5 percent in the previous quarter. That was the fifth quarter in a row below the 50 percent mark, the Federal Reserve said Thursday.
The total dollar value of equity also fell for the fourth straight quarter to $9.12 trillion from $9.52 trillion in the fourth quarter, while Americans’ total mortgage debt rose to $10.6 trillion from $10.53 trillion.
A homeowner’s equity is the market value of a property minus the mortgage debt. And homeowners’ percentage of equity has declined steadily even as home values surged during the housing boom due to a jump in cash-out refinancing, home equity loans and an increase in 100 percent financing.
Foreclosures set quarterly record
WASHINGTON — Home foreclosures and late payments set records over the first three months of the year and are expected to keep rising, stark signs of the housing crisis’ mounting damage to homeowners and the economy.
The latest snapshot of the mortgage market showed that the proportion of mortgages that fell into foreclosure soared to 0.99 percent in the January-through-March period. That surpassed the previous high of 0.83 percent over the last three months in 2007.
The report by the Mortgage Bankers Association also found that more homeowners slipped behind on their monthly payments.
The delinquency rate jumped to 6.35 percent in the first quarter, compared with 5.82 percent for the three months earlier. Payments are considered delinquent if they are 30 or more days past due.
Both the rate of new foreclosures and late payments were the highest on record going back to 1979.
Smithfield Foods earnings disappoint
Smithfield Foods Inc. posted a sharply lower quarterly profit on Thursday as losses in its hog unit, due in part to high feed prices, outweighed better results in its meat operations, which include Armour and Eckrich brands.
The stock dropped sharply on the news.
Smithfield is the nation’s largest hog producer and like other livestock and meat producers it has been hurt by much higher feed costs. The price of corn, an important feed, has surpassed a record $6 per bushel amid demand by livestock producers, grain exporters, and makers of the biofuel ethanol.
To cope, Smithfield is reducing hog production and has focused on producing more profitable packaged foods.
In Nebraska, Smithfield owns Cook’s Hams in Lincoln and the Farmland Foods pork processing plant in Crete, an Armour plant in Hastings and a Margherita plant in Omaha.
Wachovia food analyst Jonathan Feeney called the results “disappointing“, but remained positive for longer term results due in part to better results on meat sales.
— From news wires