U.S. Foreclosure Rate Hits Record High

The Mortgage Bankers Association said yesterday that the rate of homes entering foreclosure hit a record 0.54% in Q4 last year. Delinquency rates for subprime mortgages hit 14.44%, a 122 basis-point jump in three months. The overall delinquency rate on U.S. home loans leaped to 4.95% from 4.67%. The association reported that 4.53% of 5.97 million subprime loans were in foreclosure at the end of Q4, up from 3.86% at of the end of Q3. Among prime loans, however, only 0.50% of 33.32 million loans were in foreclosure, up from 0.44%. The worst-performing states in terms of delinquencies were Mississippi with a 10.64% overall rate, Louisiana with 9.10%, and Michigan with 7.87%. The states with the highest foreclosure rates were Ohio, Indiana and Michigan. Sen. Chris Dodd, D-Conn., said that while the federal government has an obligation to "protect consumers from abusive lending practices," it also must be careful to avoid imposing so much regulation that the market would be prevented from "respond[ing] to changes in underlying economic conditions."

Sources: MarketWatch, Wall Street Journal
Commentary: Big Banks Come Out Swinging Against Subprime Originators • New Century Leads Subprime Lender Selloff as its Shares Plummet 70% • Stifel: Subprime Mortgage Sector in 'Downward Spiral'
Stocks/ETFs to watch: New Century Financial Corp. (NEW), Countrywide Financial Corp. (CFC), Accredited Home Lenders Holding Co. (LEND). ETFs: iShares Cohen & Steers Realty Majors (ICF), iShares Dow Jones US Real Estate (IYR)

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.