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Total rate highest recorded in bankers' survey

Homeowners continued to fall behind on their mortgage payments in the third quarter, with the delinquency rate for loans on one-to-four-unit residential properties rising to 6.99 percent of all loans outstanding.

That's an increase of 58 basis points from the second quarter, in the Mortgage Bankers Association's National Delinquency Survey. It's 140 basis points higher than a year ago. 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 2.97 percent, an increase of 22 basis points from the second quarter of 2008 and 128 basis points from one year ago. The percentage of loans in the process of foreclosure set a new record this quarter, according to MBA.

The percentage of loans on which foreclosure actions were started during the third quarter was 1.07 percent, down one basis point from last quarter and up 29 basis points from one year ago on a non-seasonally adjusted basis.

The seasonally adjusted total delinquency rate continues to be the highest recorded in the MBA survey. That's bad news because it suggests other homeowners are struggling to make payments, and may be forced into foreclosure in the coming months. Instead of the foreclosure problem getting better, it could suggest just the opposite.

The increase in the overall delinquency rate was driven by increases in the number of loans 90 or more days past due, primarily in California and Florida. The 30-day delinquency percentage remains below levels seen as recently as 2002.

The foreclosure starts rate differed greatly by loan type. For prime loans, foreclosure starts on fixed rate loans were 0.34 percent, unchanged from last quarter, while prime ARM foreclosure starts fell five basis points to 1.77 percent.

For subprime loans, fixed rate foreclosure starts increased 16 basis points to 2.23 percent and subprime ARM foreclosure starts decreased 16 basis points to 6.47 percent. FHA foreclosure starts were unchanged at 0.95 percent and VA foreclosure starts increased two basis points to 0.59 percent, all on a non-seasonally adjusted basis.

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.

"As for what is driving the national numbers, it is still a case of product and location. Prime and subprime ARMs continue to have the highest share of foreclosures and 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," said Jay Brinkmann, MBA's chief economist.

Referred from: (http://www.consumeraffairs.com)