Late mortgage payments hit highest level since '72

By Kathleen M. Howley
Bloomberg News / May 29, 2009
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Mortgage delinquencies and foreclosures rose to records in the first quarter and home-loan rates jumped to the highest since March this week as the government's effort to fix the housing slump lost momentum.

The US delinquency rate jumped to a seasonally adjusted 9.12 percent from 7.88 percent, the biggest-ever increase, and the share of loans entering foreclosure rose to 1.37 percent, the Mortgage Bankers Association said yesterday. Both figures are the highest since 1972.

The housing decline is proving resistant to efforts by the Federal Reserve and the Obama administration to keep owners current on mortgages by allowing them to refinance or sell. Prime fixed-rate home loans to the most creditworthy borrowers accounted for the biggest share of new foreclosures at 29 percent, MBA said, a sign job losses are hurting homeowners.

One in every eight Americans is now late on a payment or in foreclosure, the MBA said.

About half of the new foreclosures were in four states: California, Florida, Arizona, and Nevada. Measuring both old and new defaults, 11 percent of all mortgages in Florida were in foreclosure at the end of the first quarter, the highest in the nation. In Nevada, it was 7.8 percent, in Arizona, it was 5.6 percent, and in California, it was 5.2 percent. New Jersey's foreclosure inventory was 4.3 percent, New York was 3 percent, and Massachusetts was 2.8 percent.

The inventory of new foreclosures and those already in the process of being foreclosed upon jumped to 3.85 percent, the MBA said. Half the loans now in foreclosure are held by prime borrowers, according to the report. About 43 percent are subprime mortgages, and 7.1 percent are Federal Housing Administration loans. A year ago, subprime mortgages accounted for 54 percent of the foreclosure inventory. Prime fixed-rate mortgages accounted for 19 percent of new foreclosures a year earlier.

The figures show that the mortgage crisis has shifted from subprime to borrowers holding the safest type of mortgages.