Another article on the real estate crisis which confirms a "wave of foreclosures" that is expected later this year. The moratoriums have only delayed the inevitable. This article comes from USA Today.
Nearly 1 in 8 of the nation's home mortgage holders were behind in their payments in the first quarter — the most since at least 1972, the Mortgage Bankers Association said Thursday.
It said more than 12% of residential mortgage loans were delinquent or in some stage of foreclosure.
The rate of foreclosure actions begun the past quarter also beat MBA figures going back to 1972.
Delinquencies and foreclosures rose despite aggressive federal efforts to curb foreclosures by getting homeowners into more affordable mortgages.
"It was a very disconcerting report. The problems are well beyond subprime, all homeowners are suffering, including prime borrowers, and it's coast to coast," says Mark Zandi at Moody's Economy.com.
"As foreclosures rise, house prices will fall and undermine household wealth and consumer spending," he says. "The rise in foreclosure is the significant threat to the end of the recession."
The delinquency rate on mortgage loans for residential properties was 8.22% on a non-seasonally adjusted basis at the end of the first quarter, the MBA said. That rate includes loans at least one payment behind but not loans in the process of foreclosure. The percentage of loans in some stage of foreclosure was 3.85%.
Meanwhile, the foreclosure rate on prime fixed-rate loans doubled in the first quarter compared with a year ago.
Prime fixed-rate loans now represent the largest share of new foreclosures, says Jay Brinkmann, the MBA's chief economist.
While foreclosure sales have cut home prices, buyers may now face rising interest rates. The average rate on a 30-year fixed-rate loan was 4.91% as of Thursday, according to Freddie Mac's weekly survey. Comparable rates were 4.82% last week, 4.78% in early and late April and 6.08% a year ago.
Joel Naroff, of Naroff Economic Advisors, says foreclosures will worsen in coming quarters due to rising unemployment and the end of moratoriums.
