WASHINGTON - The U.S.
foreclosure rate reached the highest level in almost
half a century and mortgage delinquencies rose in the
second quarter as more Americans lost their jobs, the
Mortgage Bankers Association of America said.
The delinquency rate rose to 4.77 percent from 4.65
percent the previous quarter. The rate at which
mortgages entered foreclosure stood at 0.40 percent, up
from 0.37 percent, according to the trade group, which
has tracked the rate since 1953.
More homeowners had trouble meeting mortgage payments
with unemployment averaging 5.9 percent in the quarter,
up from 4.5 percent a year earlier. Rising delinquencies
and foreclosures may prompt lenders to make fewer loans,
hurting housing, which has been credited with
underpinning the economy.
"If data keeps coming in showing these unacceptably
high foreclosure rates you're going to see a tightening
of the credit purse strings, and that won't be good for
consumers," said Barry Habib, head of sales training for
GMAC Mortgage Corp., the eighth-largest lender.
"When it comes time to sell your home there'll be
fewer people who have the ability to purchase it, and
that affects how much you can charge for it."
Delinquencies, defined as mortgages with payments at
least 30 days past due, are at their highest level since
the third quarter of 2001, when the rate was 4.87
percent.
The rise in delinquencies and foreclosures is mainly
the result of loans administered under the U.S.
Department of Housing and Urban Development's Federal
Housing Administration program.
These FHA loans are typically made to low-income
borrowers, a group that is most susceptible to predatory
lending, according to consumer groups.
Delinquencies on FHA loans rose to 11.8 percent in
the second quarter from 11.2 percent the prior quarter,
according to the Mortgage Bankers Association. The
foreclosure rate for the loans ended the quarter at 2.79
percent, up from 2.32 percent.
By comparison, the delinquency rate on conventional
mortgages stood at 3.10 percent, up from 3.04 percent,
while foreclosures increased to 0.87 percent from 0.81
percent.
Delinquency rates and unemployment numbers tend to
lag an economic recovery, meaning the figures may
increase, said Doug Duncan, chief economist for the
Washington-based trade group.
"We have emerged from the recession but only weakly,"
Duncan said. "We have yet to see a turnaround in
unemployment, critical to the recovery of
delinquencies."
Mortgage lending will likely reach $2.10 trillion
this year, surpassing last year's record $2.03 trillion,
said Phil Colling, an economist for the group.
Low mortgage rates have benefited the economy and
have driven home prices higher by allowing buyers to
qualify for bigger loans.
In the second quarter, U.S. home prices increased an
average of 7.4 percent, according to the National
Association of Realtors.
Rates for a 30-year fixed mortgage averaged 6.81
percent in the second quarter, compared with 7.13
percent a year earlier and 8.32 percent two years
earlier, according to Freddie Mac, the second-largest
buyer of U.S. mortgages.
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