The other Surge: Rate of home loans entering repossession hits high, National delinquency rate 5.12% [View All]

Rate of home loans entering repossession hits high

Angela Balakrishnan
Friday September 7, 2007

http://business.guardian.co.uk/story/0,,2164194,00.html

The rate of home loans entering the repossessions process in the US hit a record high in the second quarter due to a surge in the number of failing mortgages to lenders with poor credit histories, an industry report said yesterday. The Mortgage Bankers Association study was followed by comments from two members of the Federal Reserve Board that the turmoil in financial markets stemming from the weakening US housing market could hurt the economy.

The proportion of loans moving into foreclosure was 0.65% on a seasonally adjusted basis, 0.22 of a point up on the same period a year ago, the MBA said.

The national delinquency rate for mortgage loans also rose to 5.12%, up 0.28% from the first quarter and 0.73% from a year ago. The large increases were down to subprime loans given to high-risk borrowers, which are mostly concentrated in just a few states.

"What continues to drive the national numbers is what is happening in the states of California, Florida, Nevada and Arizona," said Doug Duncan, the MBA's chief economist. "Were it not for the increases in foreclosure starts in those four states, we would have seen a nationwide drop in the rate of foreclosure filings."