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13 Percent of Mortgages in Default or Foreclosure


The delinquency rate on one-to-four unit residential properties climbed to a seasonally adjusted rate of 9.24 percent at the end of the second quarter, according to the MBA’s National Delinquency Survey.

That’s up just 12 basis points from the first quarter of 2009, but a whopping 283 basis points from one year ago.

The delinquency rate, defined as mortgages at least one month behind, but not in the process of foreclosure, reached another record high during the quarter.

The percentage of loans somewhere in the foreclosure process reached 4.30 percent during the quarter, an increase of 45 basis points from the first quarter of 2009 and 155 bps from a year ago.

The combined total of mortgages in default or foreclosure reached a record high 13.16 percent.

The good news, if you can call it that, is foreclosure starts actually slipped a single basis point from the first to second quarter to a rate of 1.36 percent of all loans, though they were still up 28 bps from a year ago.

I hesitate to call it good news because many foreclosure starts have been delayed by various moratoria that have yet to prove themselves successful long term.

“While the rate of new foreclosures started was essentially unchanged from last quarter’s record high, there was a major drop in foreclosures on subprime ARM loans,” said Jay Brinkmann, MBA chief economist, in a release.

“The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase. As a sign that mortgage performance is once again being driven by unemployment, prime fixed-rate loans now account for one in three foreclosure starts.”

Last year, these vanilla loans accounted for just one in five; 41 states saw increases in foreclosure start rate for prime fixed-rate loans, while 43 states saw decreases for subprime adjustable-rate loans.

“We also saw a major jump in FHA foreclosures.  The percentage of loans with foreclosures started, the percentage of loans in foreclosure and the percentage of loans 90 days or more past due are all records for FHA.”

And these percentages are hitting record numbers even with all the new FHA loans being originated, which tells you just how bad it is.

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