Home Foreclosures Hit Yet Another Record

A record number of U.S. homes entered foreclosure proceedings in 2007's second quarter, according to data released Thursday by the Mortgage Bankers Association [MBA]. A seasonally 0.65% of homes entered foreclosure in Q2, shattering the first quarter's record of 0.58%, and marking the third straight quarter of record foreclosures. Q2 foreclosure starts were up 44% from Q2 2006. Loan delinquencies were also up: 18 states reported at least 19% of all subprime loans were delinquent, and 5.12% of all loans were past due. In total, almost 17% of all subprime adjustable-rate mortgages [ARMs] were delinquent, vs. 15.75% last quarter and 12.24% a year ago. Delinquent prime loans rose to 2.73% from 2.58% and 2.29% a quarter and a year ago. One bright spot: 2.85% of subprime fixed-rate loans were in foreclosure, down from 3.29% and 3.05% a quarter and a year ago. MBA chief economist Douglas Duncan said loan failures might not peak for another year or more, as many ARMs continue to rollover. The problems are worst in states that saw the largest price gains during the recent speculative housing bubble: "What continues to drive the national numbers ... is what is happening in the states of California, Florida, Nevada and Arizona," Duncan said. Excluding those states, the national foreclosure rate actually fell this quarter.

Sources: Press release, Wall Street Journal, Reuters
Commentary: Absurd Housing Bailout Proposals • Real Estate: How Far, How Fast?
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