Mortgage delinquencies, foreclosures, hit a new high

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One in seven U.S. home loans were past due or in foreclosure during the third quarter, the Mortgage Bankers Assn. said today – the highest level since the trade group started tracking troubled loans in 1972.

Consistent with recent quarterly delinquency surveys from the trade group, today’s report blamed job losses, not tricky adjustable-rate loans, for causing most of the pain. And four Sun Belt states -- California, Florida, Nevada and Arizona -- continued to account for a disproportionate amount of the pain.

Prime loans – those made to the borrowers with the best credit -- continued to make up a growing percentage of troubled mortgages. In terms of sheer numbers, soured prime loans far outpaced troubled sub-prime loans to credit-challenged borrowers.

You can read a news release on the statistic-heavy report for yourself at the Mortgage Bankers Assn. website. But here’s just one fact to consider: In California, 4.62% of fixed-rate prime mortgages, considered the safest home loans of all, were in foreclosure or 90 days delinquent, the Mortgage Bankers Assn. said. That appears to work out to about 157,000 homes in the Golden State.

Overall, 14.41% of all U.S. home loans were in foreclosure or at least 30 days past due – one in seven. To illustrate how things are getting worse, back in the fourth quarter of last year, the number was one in 10. The mortgage bankers’ group’s chief economist, Jay Brinkmann, said he expects the delinquencies to keep rising until the unemployment rate peaks in the first or second quarter of next year.

Normally, foreclosures would continue rising for two quarters past the peak in unemployment. However, given the extreme decline in home prices, Brinkmann expects the foreclosure rate to continue going up longer than usual this time.

--E. Scott Reckard