Mortgage Foreclosures Reach New Highs

WASHINGTON – The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems with subprime mortgages. The Mortgage Bankers Association reported Thursday that mortgage-holders starting the foreclosure process in the April-June quarter reached 0.65%, marking the third consecutive quarter that this figure has set an all-time high. The delinquency rate, which tracks the number of people who are behind in their payments but have not yet entered the foreclosure process, was also up sharply during the spring, rising to 5.12% of all loans, up nearly three-fourths of a percentage point from the same period a year ago. Doug Duncan, the MBA’s chief economist, said the worsening performance was driven by two factors–heavy job losses in the Midwest states of Ohio, Michigan and Indiana and the collapse of previously booming housing markets in Florida, California, Nevada and Arizona. For the second quarter, the delinquency rate for subprime loans increased sharply to 14.82%, from 13.77% in the first quarter. The delinquency rate for prime loans, offered to borrowers with good credit histories, also increased but by a much smaller amount, rising to 2.73%, up from 2.58% in the first quarter.