Long Overdue Home Mortgages Increase Sharply
The number of seriously delinquent home loans rose sharply in the third quarter as high unemployment persisted, the Mortgage Bankers Association of America said Tuesday.
Home mortgages past due by at least 90 days - the most severe type of delinquency - rose to 0.85% of all mortgages, from 0.78% in the second quarter, the trade group found in a survey. It was the biggest increase in more than five years and the highest percentage of delinquent loans in more than three years.
The runup was called "distressing" by Angelo Mozilo, president of the trade group and chief executive of Countrywide Funding Corp., Pasadena, Calif. It "dramatizes the toll the recession is taking on American homeowners," he said.
Analysts said they were particularly surprised to find that government-insured loans accounted for all of the increase. Conventional loans, which tend to go to higher-income borrowers, showed no change.
Recession's Profile Questioned
That conflicts with the perception that the nation is in a "white-collar recession." Government-insured loans generally go to people of low or moderate income.
"Maybe the recession is a little more blue-collar than people are giving it credit for," said Peter Treadway, a thrift analyst at Smith Barney, Harris Upham & Co.
Total delinquencies - loans overdue by 30 days or more - actually fell in the third quarter, to 5.07%, from 5.28% in the second quarter, the mortgage bankers group said. Most of the improvement came in loans overdue by 30 to 60 days, the mildest type of delinquency.
Despite the general improvement, analysts said it is too early to declare an end to the increases in delinquency rates that began in early 1990.
In explaining the rise in serious delinquencies, economists at the mortgage group wrote, "Clearly, there are many people who have been unemployed for quite some time or have taken jobs at significantly lower pay."