Mortgage delinquencies and foreclosures increase

Latter at highest level in nearly half a century

September 10, 2002|By BLOOMBERG NEWS

WASHINGTON - U.S. mortgage delinquencies rose in the second quarter and the foreclosure rate reached the highest level in almost half a century as more Americans lost their jobs, the Mortgage Bankers Association of America said yesterday.

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 now 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," Habib said.

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 rises in delinquencies and foreclosures are mainly the result of loans administered under the U.S. Department of Housing and Urban Development's Federal Housing Administration program.

Delinquencies on FHA loans rose to 11.8 percent in the second quarter from 11.2 percent the previous 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.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.