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Foreclosure rate rise in 2nd quarter

Foreclosures rise, driven by loss of jobs and income

WASHINGTON -- Delinquency and foreclosure rates for U.S. mortgages continued to rise in the second quarter, with loans to the most qualified borrowers going bust at an unnerving clip, especially in hard-hit states such as Florida and California.

The numbers reported Thursday by the Mortgage Bankers Association show clearly that rising job losses are worsening the nation's housing troubles and threaten the Obama administration's efforts to keep owners from losing their homes.

The quarterly National Delinquency Survey showed that almost one in 10 homeowners with a mortgage was at least one payment late, and thus delinquent, while another 4 percent had entered the foreclosure process on their loan.

Nowhere is there less sunshine in this picture than Florida. The survey found that from April to June, 12 percent of all Florida mortgages were in the foreclosure process and about 23 percent of all Florida mortgages -- almost one in four -- were late on payments or under threat of foreclosure.

More worrisome is a trend emerging deeper in the numbers: Subprime loans given to the weakest borrowers are now a declining portion of delinquency and foreclosure rates, while prime loans, given to the most highly qualified borrowers, are a rising share.

"The rise in prime delinquencies . . . is a clear indication that employment is the driver of mortgage performance, with the worst performance coming in those areas that are combining jobs losses with large drops in home values like California and Florida," Jay Brinkmann, the group's chief economist, told McClatchy. "We won't see a turnaround in delinquencies until we see improvements in employment, most likely the middle of next year."

Forty-one states notched a rise in their foreclosure rate for prime fixed-rate mortgages in the second quarter, and prime fixed-rate loans accounted for one in three foreclosure starts. A year ago they were one in five starts.

Prime fixed-rate loans are 65 percent of all U.S. mortgages outstanding, but more than 32 percent of foreclosure starts from April to June. They also constitute 27 percent of all U.S. loans now in foreclosure, up from 17 percent in the comparable 2008 period.

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