WASHINGTON – A record 12 percent of all U.S. mortgages were at least one payment behind or in the foreclosure process during the first three months of this year, a report said Thursday.
In a reminder that the nation’s economic problems aren’t going away anytime soon, the report also found that the foreclosure rate on prime fixed-rate loans to financially healthy borrowers has doubled in the last 12 months. For the first time since the explosion in subprime lending to borrowers with weaker credit began early in this decade, in fact, the largest percentage of new foreclosures in January, February and March were on prime fixed-rate loans.
In its National Delinquency Survey, the Mortgage Bankers Association, an industry trade group, reported that one in four new foreclosure proceedings in the first quarter were on prime mortgages, up from one in five during the last three months of 2008.
The trend reflects a one-two punch of growing job losses among higher-income Americans and falling home prices, and it suggests that the recession is compounding the national housing crisis.
The new data show that the four states that have experienced the most subprime loan problems – California, Florida, Arizona and Nevada – also account for more than half the increase in new foreclosures on prime mortgages. Nearly half of all first quarter foreclosure starts, 46 percent, also were in those states.
“What appears to be happening (is that) while the effects of the recession are being felt everywhere, in those states where there have already been the biggest price drops, that’s where problems are translating immediately into foreclosures,” said Jay Brinkmann, the chief economist for the mortgage bankers group.
Brinkmann said that the number of prime mortgages going into foreclosure would only increase because the U.S. economy is expected to continue shedding jobs well into next year, although the recession is expected to end by the last three months of 2009.
“What is the outlook going forward? Well, delinquencies are very much tied to employment,” he said. Most mainstream economists think that the unemployment rate, now 8.9 percent, will peak at more than 10 percent by the middle of next year.
The bankers group found that 8.22 percent of all mortgages were at least one payment late during the first quarter, the highest first-quarter level since the industry group began keeping records in 1972.
Additionally, 3.85 percent of all mortgages were in foreclosure at the end of the quarter.
Taken together, that means more than 12 out of every 100 mortgages in the U.S. was delinquent or in foreclosure in January and March. The national foreclosure rate was 1.37 percent after the first quarter, while the start rate in the four most problematic states was almost double that, at 2.45 percent.
Including all loan types, the states with the highest overall delinquency rates were Nevada (11.75 percent), Mississippi (11.7 percent) and Florida (10.67 percent). The states with the largest percentages of homes in foreclosure included Florida (10.56 percent), Nevada (7.83 percent) and Arizona (5.56 percent). Topping the list of states with new foreclosure starts were Nevada (3.35 percent), Florida (2.79 percent) and Arizona (2.52 percent).