According to a report by the Mortgage Bankers Association, we are nowhere near the end of the foreclosure crisis – and according to the Los Angeles Times, it is going to get worse before it gets better.
One in seven U.S. home loans was past due or in foreclosure as of Sept. 30, putting that quarterly delinquency measure at its highest level since 1972, when the Mortgage Bankers Assn. began reporting it. At the beginning of this year, 1 in 10 loans was past due or in foreclosure.
According to the MBA Chief Economist Jay Brinkman, this foreclosure cycle is different due to the dramatic downturn in real estate prices.
Overall, 14.41% of all U.S. home loans were in foreclosure or at least 30 days past due at the end of the third quarter — 1 in 7 — and up from 13.16% in the second quarter.
As it has for some time, the group’s report on delinquencies blamed job losses, not tricky adjustable-rate loans, for causing most of the recent pain.
The mortgage group’s chief economist, Jay Brinkmann, said he expected the delinquencies to keep rising until the unemployment rate tops out in the first or second quarter of next year.
Normally, foreclosures would continue rising for two quarters past the peak in delinquencies, he said. However, given the extreme decline in home prices, Brinkmann predicted the foreclosure rate would continue to rise longer than usual past the peak in delinquencies.
Lastly, not all states are impacted the same – many of the nation’s foreclosures can be found in just 4 states:
Four Sun Belt states where the housing bubble inflated the most and exotic lending was most prevalent — California, Florida, Nevada and Arizona — accounted for 43% of the foreclosures started in the third quarter.
