Two in 15 home mortgages were at least one payment past due or in foreclosure at the end of June, according to the Mortgage Bankers Association.
That's the highest combined delinquency and foreclosure rate since the MBA began keeping such records in 1972. The MBA released results of its second-quarter delinquency survey Thursday.
One in 11 mortgages (9.24 percent) were at least one month past due but not in foreclosure. That was a substantial jump over the delinquency figure one year previously. In the second quarter of 2008, the delinquency rate was 6.41 percent, or about one in 15.6 mortgages.
At the end of June this year, one in 23 mortgages (4.3 percent) was in the process of foreclosure. A year earlier, the foreclosure rate was one in 36 mortgages, or 2.75 percent.
The combined delinquency and foreclosure rates for this year's second quarter equal 13.16 percent, or about two in 15 mortgaged homes.
There has been a dramatic shift in the type of loans that are going bad, says Jay Brinkmann, the MBA's chief economist. For a couple of years, subprime loans made up a big chunk of delinquencies and foreclosures. But in the last year there has been a surge of delinquencies and foreclosures on prime, fixed-rate loans.
At the beginning of the mortgage crisis, people were squeezed by the type of loans they got -- namely, subprime adjustable-rate mortgages, Brinkmann says. Now delinquencies are driven less by loan type and "increasingly by fundamental issues of the economy. It's job losses, it's drops in home prices that have been causing the problems."
Job loss now to blameA number of foreclosure-prevention policies, including the Obama administration's Making Home Affordable modification and refinancing programs, have been put into place in the last year and a half. Brinkmann notes that these programs tend to focus on problems caused by rising monthly payments, which indeed were a major issue when rates on subprime ARMs were adjusting upward. But now most delinquencies involve prime, fixed-rate loans by borrowers who have fallen behind on their house payments because they have lost their jobs. Unemployment is a different problem that isn't addressed by the solutions that are now in place.
"The problem in the prime, fixed-rate market is a job-related issue," Brinkmann says. "There's no income to deal with. With these borrowers, you end up having to work with them on an individual basis -- how much forbearance can we put into place to give you enough time to find another job? There's no national program that's going to help borrowers who are out of work."
Unemployment and falling property prices have hit Florida homeowners especially hard, giving them the highest combined rate of delinquency and foreclosure. In the Sunshine State, 10.8 percent of mortgages were at least 30 days past due at the end of June, and another 11.96 percent were in foreclosure. That adds up to 22.76 percent of Florida mortgages were delinquent or in foreclosure -- or 10 in 44.
Nevada was close behind, with a delinquency rate of 12.14 percent and a foreclosure rate of 9.13 percent, for a combined 21.27 percent -- or 10 in 47.
North Dakota fared best, with a delinquency rate of 3.76 percent and a foreclosure rate of 1.01 percent.
"Keep in mind that it's a big country, and we will have multiple bottoms" in multiple housing markets, Brinkmann says. "Some markets will start to recover faster. We've got employment situations perhaps getting better in some areas while they're getting worse in others. So it's always problematic to look at national numbers -- to look at a national recovery as opposed to disaggregating into individual markets."
What that caveat, Brinkmann expects the national unemployment rate to peak in the middle of next year, and for foreclosures to peak toward the end of next year.