The share of homeowners paying their mortgages late, as well as the share of homeowners in the foreclosure process, saw a significant increase during the third quarter of 2008 compared with both the previous quarter and the same time a year earlier, according to the Mortgage Bankers Association (MBA).
MBA's quarterly National Delinquency Survey (NDS) noted that the delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 6.99 percent of all loans outstanding in the third quarter of 2008--the most recent numbers available--on a seasonally adjusted (SA) basis, up 58 basis points from the second quarter and up 140 basis points from one year ago.
The percentage of loans in the foreclosure process at the end of the third quarter was 2.97 percent, an increase of 22 basis points from the second quarter of 2008 and 128 basis points from one year ago--a new record.
The percentage of loans on which foreclosure actions were started during the third quarter was 1.07 percent, down 1 basis point from last quarter and up 29 basis points from one year ago on a non-seasonally-adjusted basis, according to MBA.
While much of the mortgage problem in some states continues to be overbuilding, poor underwriting and incorrect credit pricing, fundamental economic factors are becoming more important, according to MBA Chief Economist Jay Brinkmann.
"The 30-day delinquency rate is still lower than it was in the 2001 recession, but job losses are mounting," said Brinkmann. "We have not gone into past recessions with the housing market as weak as it is now, so it is likely that a much higher percentage of delinquencies caused by job losses will go to foreclosure than we have seen in the past."
The seasonally adjusted total delinquency rate continues to be the highest recorded in the MBA survey, said Brinkmann. The increase in the overall delinquency rate was driven by increases in the number of loans 90 or more days past due, primarily in California and Florida, while the 30-day delinquency percentage remains below levels seen as recently as 2002.
The foreclosure starts rate differed greatly by loan type. For prime loans, foreclosure starts on fixed-rate mortgages (FRMs) were 0.34 percent, unchanged from last quarter, while prime adjustable-rate mortgage (ARM) foreclosure starts fell 5 basis points to 1.77 percent.
For subprime loans, fixed-rate foreclosure starts increased 16 basis points to 2.23 percent and subprime ARM foreclosure...