The delinquency rate for mortgage loans on one-to-four-unit residential properties stands at 6.99 percent of all loans outstanding, up 58 basis points from the second quarter of 2008, and up 140 basis points from one year ago on a seasonally adjusted basis.
Jay Brinkmann
The seasonally adjusted total delinquency rate continues to be the highest recorded in the MBA survey, says MBA Chief Economist and Senior Vice President for Research and Economics Jay Brinkmann.Prime and subprime ARMs continue to have the highest share of foreclosures. California and Florida have about 54 percent and 41 percent of the prime and subprime ARM foreclosure starts respectively.
"Until those two markets turn around, they will continue to drive the national numbers," says Brinkmann.
Nine states had rates of foreclosure starts that were above the national average: Nevada, Florida, Arizona, California, Michigan, Rhode Island, Illinois, Indiana, and Ohio.
The remaining 41 states plus the District of Columbia were below the national average.
Brinkmann says that "while much of the mortgage problem in some states continues to be overbuilding, poor underwriting and incorrect credit pricing, fundamental economic factors are becoming more important.
The 30-day delinquency rate is still lower than it was in the 2001 recession, but job losses are mounting.
"We have not gone into past recessions with the housing market as weak as it is now so it is likely that a much higher percentage of delinquencies caused by job losses will go to foreclosure than we have seen in the past," says the MBA economist.
"Until recently, it was job and population losses that were the problems in states like Michigan and Ohio, whereas the problems in California and Florida were a combination of too many houses, speculation and weak underwriting," he says.
"Economic fundamentals are now deteriorating in California and Florida. Over the past year, Florida led the nation in job losses at 156,200, with California losing 101,300, as compared with Michigan job losses at 71,200 and Ohio at 17,300.
In the last quarter, about 575,000 foreclosure actions were started, compared with an estimated 580,000 in the second quarter and 535,000 in the first quarter.
"At this rate we are looking at finishing 2008 at about 2.2 million foreclosure actions started," Brinkmann says.
"Absent a recession, the 2009 number would likely have fallen by several hundred thousand but the effects of job losses and general economic deterioration make the 2009 outlook worse, particularly if mortgage problems become more widespread."
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