Mortgage delinquency and foreclosures reach record high in Q1

Mortgage delinquency and foreclosures reach record high in Q1

According to data released by the Mortgage Bankers Association, the 2009 first quarter saw a record number of homeowners into delinquency or foreclosure, particularly due to the ever-increasing unemployment levels. 

As per the survey by the industry group, nearly 12.07 percent of mortgage loans were either delinquent or in the foreclosure process during the quarter - marking a record high ever since the survey began in 1972; with the year-on-year increase being nearly 8 percent. During the quarter, out of all the loans in foreclosure, 49.8 percent comprised prime loans and 43.2 percent comprised subprime loans.

Statistics reveal the endeavors of the government to cut foreclosure rates have failed to effectively counterbalance the impact that the downturn has had on struggling borrowers. Specifically speaking, the foreclosure crisis has gripped four states - California, Florida, Nevada, and Arizona - which together make up 56 percent of the increase in foreclosure starts. While earlier the home prices in these states had spiked the highest, they have now nose-dived.

Saying that the rise in foreclosure numbers is "sobering," Jay Brinkmann - Chief Economist with Mortgage Bankers Association - added: "More than anything else, this points to the impact of the recession and drops in employment on mortgage defaults. Looking forward, it does not appear the level of mortgage defaults will begin to fall until after the employment situation begins to improve."