Foreclosure, delinquency rates
spike amid growing unemployment
By Renae Merle Washington Post Staff Writer Thursday, November 19, 2009
12:10 PM
The share of homeowners delinquent on their mortgage or
in foreclosure hit a new record during the third quarter,
according to industry data released Thursday, which also
indicates that the problem is likely to get worse through next
year as unemployment rates continue to rise.
About 9.6 percent of borrowers were delinquent on their
mortgage during the third quarter, according to the survey
by the Mortgage Bankers Association, and 4.5 percent more
were somewhere in the foreclosure process. Overall, about
14 percent of mortgage loans were delinquent or in the
foreclosure process during the quarter, according to the
group.
That is the highest level ever recorded by the survey, which
has been conducted since 1972. That is up from 9.7 percent
of borrowers who were in trouble during the same period
last year.
The majority of the problem remains in the Sun Belt states,
such as California and Florida, which accounted for about
43.4 percent of the foreclosures started during the third
quarter. But loans insured by the Federal Housing
Administration are making up a bigger part of the problem
also, according to the survey. Of the foreclosures started
during the quarter, 10.6 percent were insured by FHA, up
from 7.8 percent during the same period last year.
Also, the challenge is also continuing to shift from the
subprime loans that sparked the housing downturn to prime
loans, which are traditionally considered safer and make up
the bulk of the mortgages outstanding in the country. Of the
loans in foreclosure during the quarter, about 55 percent
were made to prime borrowers, compared with 37 percent
that were subprime.
"The outlook is that delinquency rates and foreclosure rates
will continue to worsen before they improve," Jay
Brinkmann, MBA's chief economist, said in a statement. It "is
unlikely the employment picture will get better until
sometime next year and even then jobs will increase at a
very slow pace. Perhaps more importantly, there is no
reason to expect that when the economy begins to add
more jobs, those jobs will be in areas with the biggest
excess housing inventory and the highest delinquency
rates."
The foreclosure problem is building despite a massive
government program, known as Making Home Affordable,
which pays lenders to lower borrowers' payments. The
administration has said more than 600,000 borrowers have
been added to that program this year.