Mortgage Delinquencies Climb to 20 Year High, Foreclosures Hit All Time High

December 6, 2007 No Comments »

On the same day the Bush Administration plans to release an interest-rate freeze proposal, the Mortgage Bankers Association reported that U.S. mortgage delinquencies hit a 20-year high during the third quarter, while foreclosures hit an all-time high.

The MBA report released today said the share of all home loans on one-to-four unit properties with mortgage payments more than 30 days late rose to a seasonally adjusted 5.59 percent, the highest level since 1986, up 0.47 percent from the second quarter and 0.92 percent from the third quarter of 2006.

One in every five adjustable-rate subprime loans had late payments in the third quarter, a number that excludes the one of every 10 already in foreclosure, according to the MBA report.

New foreclosures hit an all-time high for a second consecutive quarter, with loans entering the foreclosure process rising to 0.78 percent from 0.65 percent, up 0.32 percent from the third quarter of 2006.

“This is the first quarter which registers the full combined effects of the seizure of the nonconforming securitization market, broad-based home price declines, continued weakness in some regional economies, and rate adjustments on monthly payments,” MBA Chief Economist Doug Duncan said in a release. “The predictable results are increased delinquency and foreclosure.”

In the third quarter, subprime late payments rose to 16.3 percent from 14.8 percent, while 3.12 percent of prime borrowers made their mortgage payments at least 30 days late, up from 2.73 percent in the second quarter.

The MBA survey found that 43% of the loans entering foreclosure during the third quarter were subprime ARMs, which represent 6.8% of all mortgage loans outstanding.

A whopping 4.72 percent of subprime adjustable-rate mortgages started the foreclosure process during the third quarter.

Prime ARMs also climbed significantly, rising 0.40 percent to 1.02%.

The survey found that Florida and California had a 42.4% share of the total foreclosure starts for prime ARMs and 33.7% for subprime ARMs during the quarter.

The report is based on a survey of 45.4 million loans by mortgage lenders, commercial banks, thrifts, credit unions and other financial institutions.

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