WASHINGTON, Dec. 6, 2007
U.S. Home Foreclosures Hit Record High
Subprime Mortgage Holders Hit Hard; More Homeowners Falling Behind On Payments
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Nettie McGee, 73, a great-grandmother from Chicago with mortgage interest problems, left, sits as she and others are sworn in on Capitol Hill in Washington, Wednesday, Dec. 5, 2007, prior to testifying before the Senate Judiciary Committee hearing on home foreclosures. (AP Photos/Susan Walsh)
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The Mortgage Bankers Association in its quarterly snapshot of the mortgage market released Thursday said that the percentage of all mortgages nationwide that started the foreclosure process jumped to a record high of 0.78 percent during the July-to-September period. That surpassed the previous high of 0.65 percent set in the prior quarter.
More homeowners also fell behind on their monthly payments.
The delinquency rate for all mortgages climbed to 5.59 percent in the third quarter. That was up from 5.12 percent in the second quarter and was the highest since 1986, the association said. Payments are considered delinquent if they are 30 or more days past due.
Homeowners with spotty credit who have subprime adjustable-rate loans were especially hard hit. Foreclosures and late payments for these borrowers also reached all-time highs in the third quarter.
The percentage of subprime adjustable-rate mortgages that entered the foreclosure process soared to a record of 4.72 percent in the third quarter. That was up from 3.84 percent in the second quarter. Late payments jumped to a record high of 18.81 in the third quarter, up from 16.95 percent in the second quarter.
The association's survey covers more than 45 million home loans nationwide.
The new figures came as President Bush, accused by Democrats and other critics of not doing enough to help stem the mortgage crisis, was set to unveil a plan Thursday that would allow some homeowners with certain subprime home loans to freeze their interest rate for five years. The plan aims to prevent some distressed borrowers from losing their homes. It also is intended to ease the danger facing the economy from a wave of foreclosures - something that would further aggravate problems in the housing market.
According to White House press secretary Dana Perino, not all subprime mortgage holders will qualify for the program. The government estimates about a million will get help, according to CBS News White House correspondent Mark Knoller.
Perino says no taxpayer dollars are being spent as part of the program.
Homeowners with spotty credit histories or low incomes who took out higher-risk subprime adjustable-rate mortgages have suffered the most distress as the housing market went from boom to bust.
Initially low interest rates that reset to much higher rates have clobbered these borrowers. Analysts estimate that nearly 2 million adjustable-rate subprime mortgages will reset to higher rates this year and next.
Doug Duncan, the association's chief economist, said in an interview with The Associated Press that foreclosures and late payments are likely to stay high or get worse in the coming quarters.
The mortgage meltdown has hit financial companies with billions of dollars in losses from bad subprime mortgage investments. Some lenders have been forced out of businesses. The situation has elevated the odds of the country falling into a recession. It has roiled Wall Street and has offered lots of fodder for Democrats and Republicans to blame each other for the mess.
Against this backdrop, the Federal Reserve next week is expected to slice a key interest rate for a third time this year to bolster the economy.
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Subprime Mortgage Holders Hit Hard; More Homeowners Falling Behind On Payments"
I think some of the writers of these kind of articles worked in a used car dealer.The truth is that this mess just began-the real brunt will be coming in 2008.Trying to manage consumers'' fears-feels like trying to put out a wild fire.
Bush has been so enthralled with securing middle east oil by force over the last 7 years, he has never given much thought or interest to domestic affairs.
The result?? A flaming domestic meltdown on all fronts. More failing schools, more children lack healthcare, immigration is a mess, no social security reform, a weak and dangerous infrastructure, the rate of species becoming extinct sky high a weakening of endangered species act, illegal logging and mining, and a boatload of environmental court cases, 90% of which the Bush admin lost.
What a complete waste of time this presidency has been. No, worse than a waste of time. Not only a waste of time, also money, men, equipment and just about anything I can think of.
Posted by l8c6
Wow!!
Well said.
The problem of people being in "over their head" is hardly restricted to folks with bad credit, sub prime and the like.
There are a huge number of solid citizen types, making good money, that could only buy in the Florida, California, and other "hot" markets by getting a "teaser" rate for their overpriced real estate. They could "qualify" at the teaser rate, and even that was a stretch, with the idea that they would continually refinance to a NEW ARM, or if their incomes went up, possibly a fixed.
This is a WIDESPREAD plan by many to attempt to get into the housing market before it was "too late" for them to buy ANYTHING! With their realtors egging them on, and the loan people being GLAD to sell folks with GREAT credit an ARM, Teaser, Interest Only, or similar loan, KNOWING they would be back in 2 or 3 years to buy a new loan (MORE fees). And of course the assessors were just rubber stamping the appraisals, ... figuring that if they were a bit high, give it a few months, and it would be dead on.
NOw, the house of cards is falling, slicing up everyone underneath.
HOusing is NOT going up enough and is even going down so a refi is NOT supported anymore, the loans that folks would need to jump to, like frogs onto lilypads, are GONE, and incomes sure haven''t risen enough for them to handle a fixed loan at 7% when they could barely hander the teaser interest only at 3%!
- by omega39-2009 December 6, 2007 2:48 PM EST
- Against this backdrop, the Federal Reserve next week is expected to slice a key interest rate for a third time this year to bolster the economy...
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See all 16 CommentsThe good news is that soon the dollar will be so worthless, companies will start pulling out of India and China and returning their jobs to the third world United States.