Quarterly Foreclosure Rate Again Sets Record

Network News

X Profile
View More Activity
By David S. Hilzenrath and Dina ElBoghdady
Washington Post Staff Writers
Friday, September 7, 2007

The percentage of mortgages entering foreclosure rose to a record level during the three months ended June 30, according to a survey released yesterday.

The defaults left homeowners struggling to hold onto their houses and threatened to put added pressure on already-weakening home prices.

However, the pain was far from evenly distributed.

If not for increases in foreclosure filings in California, Florida, Nevada and Arizona, the nationwide rate would have dropped from the first quarter of the year to the second, according to the quarterly survey by the Mortgage Bankers Association. Thirty-four states experienced declining foreclosure filings, and others showed modest increases, the industry group said.

"If current conditions persist in mortgage markets, the demand for homes could weaken further, with possible implications for the broader economy," Randall S. Kroszner, a member of the Federal Reserve Board of Governors, said in a speech yesterday.

The survey found that 0.65 percent of the approximately 44 million mortgages covered in the survey went into foreclosure in the second quarter, the highest percentage since the group began tracking comparable numbers in 1972. The seasonally adjusted percentage was up from the prior record of 0.58 percent in the first quarter of 2007 and 0.43 percent during the second quarter of last year.

Foreclosure proceedings generally begin months after borrowers fall behind on their mortgage payments. In some states, the foreclosure process can take a year or more to run its course, and many delinquent borrowers hold onto their homes by negotiating for more-manageable payment terms.

Overall, about 6.5 percent of homeowners who have mortgages are not paying on time, according to Douglas G. Duncan, the association's chief economist. More than a third of homeowners do not have mortgages.

Among the hardest-hit states have been Michigan and Ohio, whose real estate markets reflect the weakness in their industrial-based economies. In Maryland, Virginia and the District, delinquencies and foreclosure starts have been significantly lower than the national averages.

The survey does not show how many of the homes that enter the foreclosure process are lost through foreclosure or how many families avoid public foreclosure proceedings by giving up their homes voluntarily.

The defaults were heavily concentrated among adjustable rate loans, and, when compared with the first quarter of the year, the serious delinquency rate fell slightly for subprime loans with fixed rates.

By some measures, the picture was worse as recently as five years ago, when the real estate market was showing lingering or delayed effects of recession and the bursting of a stock market bubble.


CONTINUED     1        >

© 2007 The Washington Post Company

Network News

X My Profile
View More Activity