A record number of Americans were in danger of losing their homes in the fourth quarter, even as new delinquencies declined, the Mortgage Bankers Association reported.
Loans in foreclosure rose to 4.58% of all mortgages, while those more than 90-days overdue - when lenders usually begin the process of seizing a property - climbed to 5.09%, the organization said in a report released Friday.
Government efforts to stop foreclosures have been hindered by the largest employment contraction since the Great Depression. U.S. companies have shed more than 7 million jobs since December 2007. The unemployment rate fell to 9.7% in January after hitting a 26-year high of 10.1% in October, according to the Bureau of Labor Statistics.
U.S. home prices began declining in 2006 after reaching a peak of almost four times the nation’s median household income, an increase that had stretched the ability of many buyers to meet mortgage payments. The rate of subprime mortgage delinquencies more than doubled in the two years ended last quarter, triggering $1.7 trillion of losses and writedowns for financial companies that invested in mortgage bonds.
The MBA's report showed payments overdue by 30 days or more for all types of mortgages fell to a seasonally adjusted 9.47% in the fourth quarter from 9.64% in the prior three months, the first drop since 2007's first quarter. The delinquency rate for prime loans fell to 6.73% from 6.84%, and the share of subprime late payments fell to 25% from 26%.
The MBA data supports mortgage delinquency numbers released a week ago by credit bureau TransUnion that revealed the rate of homeowners falling behind on mortgage payments surged in the fourth quarter, with home loans 60 or more days past due reaching 6.9% of all home loans nationally. TransUnion samples 27 million consumer files at random each quarter to track credit trends, including the number of mortgages that are at least 60 days late or in foreclosure. The results are seen as a precursor to foreclosures. This was the 12th straight quarter of increasing delinquencies.
The speed at which loans were souring surprised TransUnion. The trend was a switch from the previous three quarters, wheh delinquency rates rose at a slower pace.
Last year, President Obama pledged to spend $275 billion to keep as many as 9 million Americans in their homes by refinancing properties that are valued at less than their mortgages and offering incentives to companies that modify terms for delinquent borrowers. The government also is offering a tax credit of as much as $8,000 for homebuyers who complete purchases before July 1.
The administration’s primary anti-foreclosure plan, the Home Affordable Modification Program, or HAMP, resulted in more than 116,000 permanent loan modifications by the end of January, compared with a goal of as many as 4 million by December 2012, the Treasury Department said in a report released last week,
