U.S. home foreclosures hit new high
Last Updated: Friday, September 5, 2008 | 10:19 AM ET
The Associated Press
More than four million American homeowners with a mortgage, a record nine per cent, were either behind on their payments or in foreclosure at the end of June, as damage from the housing crisis worsened, the Mortgage Bankers Association said Friday.
But the source of trouble in the mortgage market has shifted from subprime loans made to borrowers with poor credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.
"The problem that policymakers and Wall Street once assured us was 'contained' to subprime mortgages has proven to be anything but," Mike Larson, a real estate analyst with Weiss Research, said in a research note.
The trouble is concentrated in a handful of states, the worst being California and Florida, which had some of the riskiest lending practices and rampant speculation.
"We are unlikely to see a national turnaround until we see a turnaround in the two largest states," with the most outstanding home loans, said Jay Brinkmann, the association's chief economist.
Broke records for late payments
The latest quarterly figures broke records for late payments, homes entering the foreclosure process and for the inventory of loans in foreclosure. The trade group's records go back to 1979.
The percentage of loans at least one month past due or in foreclosure was up from 8.1 per cent in the January-March quarter, and up from 6.5 per cent a year ago, using figures that were not adjusted for seasonal factors.
New foreclosures rose dramatically in eight states: Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana and Ohio, but actually declined in Texas, Massachusetts and Maryland.
Almost 500,000 homeowners, or about one per cent, entered the foreclosure process in the second quarter.
But for the first time since the mortgage crisis started, delinquencies on subprime adjustable-rate loans declined.
