US mortgage delinquency rates and the percentage of loans that entered the foreclosure process jumped in the third quarter, with both reaching record highs, the Mortgage Bankers Association said on Thursday.
The percentage of loans on which foreclosure actions were started rose to 1.42 percent in the third quarter, an all-time high, up from 1.36 percent in the second quarter and 1.07 percent in the third quarter of 2008.
Rising U.S. unemployment propelled more mortgage delinquencies and foreclosures, a trend that will continue into next year, the MBA said.
`It is all about unemployment, everything else is secondary,` MBA`s chief economist Jay Brinkmann said in an interview.
`We expect unemployment to keeping rising into the first quarter of 2010, which means we will most likely see even higher rates of delinquencies and foreclosures,` he said.
The Labor Department said the unemployment rate reached a 26-1/2-year of 10.2 percent in October.
The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.64 percent of all loans outstanding as of the end of the third quarter of 2009, up 40 basis points from 9.24 percent in the second quarter and up 265 basis points from 6.99 percent one year ago, the MBA said in its National Delinquency Survey.
The delinquency rate broke the record set last quarter. The records are based on MBA data dating back to 1972.
The delinquency rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure.
The percentage of loans in the foreclosure process at the end of the third quarter was 4.47 percent, an increase of 17 basis points from 4.30 percent the second quarter of 2009 and 150 basis points from 2.97 percent one year ago.
The combined percentage of loans in foreclosure and at least one payment past due was 14.41 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.
It looks like we are witnessing the trailor of sub-prime crisis era. At that time no one believed it and just shrugged it of. Ultimately, the wolf came and pounced on the economy. It looks like now commercial realty will have a cascading effect on banks and next round of bank`s going bankrupt is not very far off. Let us not forget that commercial realty loans are very sizeable percentage of US credit markets as compared to sub-prime market and therefore, effect will be really disastrous. Uptil now somehow banks were managing and hoping for a comeback of economy but ultimately they have to provide for NPAs. My intention is not to frighten bulls but to instigate bears that there is an opportunity knocking at your doors !!!!!!!!
I am sad and shocked that smart intelligent people keep repeating the self serving official line put out by the big guns in Wall Street. THERE IS NO MORE OF MORTG?AGE CRISIS THAN A TYPICAL BUSINESS GOING UNDER FOR MAKING STUPID UNWISE LOANS to unqualified people.
What made it more dangerous was that these big league thieves securitized these low quality loans, bundled them with some high quality loans and got themselcevs AAA rating from Moody S&P etc. The Credit default swap derivates based on this securities have unknown 3rd parties and now the US government is on hock for 504 trillion dollars. Resident and commercial loans were made simultaneously. They are now releasing it in series one after another to make sure each loss gets paid off by the govt. A sucker is born every day.
| NIFTY 
