American Banker (03/07/08); Berry, Kate
The Mortgage Bankers Association reports an increase in the national mortgage delinquency rate to 5.82 percent in the fourth quarter, marking the highest level since 1985. Of new foreclosures, MBA says 42 percent were subprime adjustable-rate loans. According to MBA chief economist Doug Duncan, "Many of the loans that are going into foreclosure today started out with a first and second mortgage and very little equity, so it took small changes in house-price declines for the consumer not to pay." Approximately 30 percent of new foreclosures in the fourth quarter were in Florida and California, where overbuilding is a problem, and Duncan notes that rising unemployment and out-migration are responsible for a jump in foreclosures in Michigan, Ohio and Indiana. However, recent rate cuts by the Federal Reserve could help some borrowers avoid foreclosure.
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