Foreclosures Jump to Record Highs, and Focus Turns to Relief Efforts

New York Times (03/07/08) P. C1; Bajaj, Vikas
The Mortgage Bankers Association reports a jump in the mortgage default and foreclosure rate to 7.9 percent in the fourth quarter from 7.3 percent in the third quarter, with subprime mortgages accounting for more than 25 percent of the troubled loans. The report also reveals an increase in the default and foreclosure rate for prime adjustable-rate mortgages to 8.1 percent in the fourth quarter from 4.3 percent during the same period in 2006, while the rate of defaults and foreclosures for prime fixed-rate mortgages edged up to 3.1 percent from 2.7 percent over the same time span. MBA believes speculators are responsible for much of the increase, as 18 percent of the homes in foreclosure were not occupied by their owners. With the default and foreclosure rate expected to rise, lawmakers and federal officials are pushing for more programs to help homeowners. Federal Reserve Chairman Ben Bernanke, for instance, wants lenders to adjust loan balances to account for home-price declines and believes more loans should be guaranteed by the FHA--a move Federal Reserve Bank of Boston President Eric Rosengren said could help both investors and borrowers by lowering costs.