More homeowners late on loan payments

LOS ANGELES – Adding to worries about the economy’s direction, the number of newly delinquent home loans has risen for two straight quarters in what could foreshadow another surge in unemployment-related foreclosures.

The consequences of the increase in fresh delinquencies are uncertain. But the rise presents a troubling counterpoint to positive trends in severely delinquent loans and foreclosures, which, although still at very high levels, have begun to decline, the Mortgage Bankers Association said Thursday.

The delinquency report followed news this week of unexpectedly sharp declines in home sales despite record-low mortgage interest rates.

Economists attributed the increase in newly delinquent mortgages to the country’s persistently high unemployment.

“It takes a paycheck to make a mortgage payment,” said Jay Brinkmann, chief economist for the Mortgage Bankers Association. He said the trend could lead to another increase in foreclosures if the employment picture doesn’t brighten soon.

“Unfortunately, since April, there has been almost no job growth at all, so I think that is where the risk lies looking forward,” said Christopher Low, chief economist at Chicago investment firm FTN Financial.

The declines in serious delinquencies and foreclosures were caused in part by a since-expired federal tax credit for home purchases, Brinkmann said. The credit caused a brief spike in sales, allowing some late-paying borrowers to catch up by selling their properties.

The mortgage bankers group said the percentage of newly delinquent mortgages – defined as at least 30 but less than 60 days in arrears – fell for three straight quarters last year from a peak of 3.77 percent but then reversed course this year and stood at 3.51 percent in the April-to-June period.

There were about 4.5 million of these loans at the end of June, about the same as the number of houses for sale, Brinkmann said.