14.41 Percent of All Mortgages Late or in Foreclosure

November 19, 2009 No Comments »

foreclosure sign

A staggering 14.41 percent of all residential mortgages were either delinquent or in some stage of foreclosure as of the end of the third quarter, according to the latest survey from the Mortgage Bankers Association.

The delinquency rate (at least one month behind) rose to 9.94 percent from 8.86 percent a quarter earlier, while the foreclosure rate climbed to 4.47 percent from 4.30 percent in the second quarter and 2.97 percent last year.

The combination of loans either in foreclosure or behind on mortgage payments was the highest ever recorded by the MBA.

“The percentages of loans 90 days or more past due, loans in foreclosure, and foreclosures started all set new record highs,” the MBA said in a release.

“The percentage of loans 30 days past due is still below the record set in the second quarter of 1985.”

Stay tuned for that…

The MBA noted that the increases in both delinquency and foreclosure starts have been driven by prime fixed-rate loans and FHA loans, as opposed to subprime loans early on in the crisis, thanks to increasing levels of unemployment.

Interestingly, prime adjustable-rate mortgages (which include pay option arms) are now performing worse than subprime fixed-rate loans.

“The foreclosure rate on FHA loans also increased, despite having a large increase in the number of FHA-insured loans outstanding,” said Jay Brinkmann, MBA’s Chief Economist.

“The number of FHA loans outstanding has increased by about 1.1 million over the last year. This increase in the denominator depresses the delinquency and foreclosure percentages.”

Going forward, the MBA expects delinquency and foreclosure rates to get worse before they get better, especially with over four million loans late or in foreclosure (shadow inventory), exceeding the 3.9 million new and previously occupied homes currently for sale.

Leave A Response