The percentage of homes in foreclosure reached a record in the third quarter of 2002, though a banking group said yesterday that fewer people are falling behind on their mortgage payments, a sign that housing credit is likely to improve during the coming months.
The Mortgage Bankers Association of America said yesterday that 1.15 percent of the country's home mortgages were in foreclosure during the three months that ended Sept. 30.
That was up from 1.13 percent in the second quarter and the most since the industry group began tracking the figures in 1972. The previous record was 1.14 percent in the first quarter of 1999. Nationally, there were more than 34 million mortgages in the third quarter.
In Maryland, the foreclosure rate was 1.39 percent, down from 1.41 percent in the second quarter. There were more than 963,000 mortgages in the state in the third quarter.
But the banking group pointed to other figures that showed improvements in mortgage credit quality.
New foreclosures filed in the third quarter fell to 0.37 percent of all loans, down from 0.38 percent in the previous three months. And all loans that were past due fell to 4.66 percent in the third quarter, down from 4.77 percent in the previous quarter.
In Maryland, the percentage of delinquencies rose to 5.5 percent in the third quarter, from 5.48 percent in the second quarter.
Doug Duncan, senior vice president and chief economist for the bankers group, said delinquencies and foreclosures rose during the first two quarters of 2002 as the economy limped out of the recession. He attributed the third-quarter figures to an economy in recovery.
Economists blame a mix of things for last year's credit problems, including layoffs, consumers who have taken on more debt than they can handle and the nationwide push to increase homeownership rates.
That in turn has led to an increase in sub-prime lending -- banks that offer higher interest rates to people with poor credit.
"I did think credit conditions would get worse because there has been so much borrowing going on," said Celia Chen, a senior economist at West Chester, Pa.-based Economy.com who studies housing. "But overall credit quality, while it has been deteriorating a little bit, it's not that bad on the mortgage side."
Federal Reserve figures show consumer debt in the United States was up 42 percent during the past five years, reaching a little more than $1.72 trillion in the third quarter of 2002.
