Magazine article American Banker

Foreclosures Hit Record, Continue to Climb: MBA

Magazine article American Banker

Foreclosures Hit Record, Continue to Climb: MBA

Article excerpt

Loan foreclosures set a record in the first quarter but have not yet peaked, according to a survey the Mortgage Bankers Association released Thursday.

The percentage of loans that entered foreclosure rose 9 basis points from the fourth quarter and 30 basis points from a year earlier to 1.28%, the highest level since the MBA began its National Delinquency Survey in 1972.

The nation's delinquency rate, which measures loans that are 30 days past due but not yet in foreclosure, declined 11 basis points from the fourth quarter but climbed 43 basis points from a year earlier, to 4.84%, according to the survey.

Subprime adjustable-rate mortgages remained the driving force behind the rise in foreclosures in the first quarter.

The percentage of subprime ARMs in foreclosure climbed 53 basis points from a year earlier, to 3.23%.

Doug Duncan, the MBA's chief economist and senior vice president of research and business development, said foreclosures and delinquencies are also being driven by investor speculation in four states: Arizona, California, Florida, and Nevada.

He also cited a high level of construction relative to the overall populations in Indiana, Michigan, and Ohio, which also have been hit by heavy job losses.

"If the degree of overbuilding and investor participation in those markets continues, it will delay the pace of recovery and lead to some continued increase in foreclosures," he said in a conference call Thursday.

"I think it's reasonable to think we'll see a peak of delinquency rates this year, but not see a peak in foreclosure until 2008," Mr. Duncan said.

Even thoughforeclosure rates on subprime ARMs dropped in the first quarter in 26 states, Mr. Duncan cautioned that it is still difficult to predict when housing markets will rebound.

Part of the reason is the difficulty in getting accurate data, particularly on investor-owned properties, he said. …

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