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Defaults Show Spreading Impact of Recession

The percentage of loans in the foreclosure process at the end of the fourth quarter of 2008 was 3.30%, an increase of 33 basis points from the third quarter of 2008 and 126 basis points from a year ago, according to the Mortgage Bankers Association's National Delinquency Survey.

"Subprime ARM loans and prime ARM loans, which include Alt-A and pay option ARMs, continue to dominate the delinquency numbers," said Jay Brinkmann, MBA's chief economist and senior vice president for research and economics. "We will continue to see, however, a shift away from delinquencies tied to the structure and underwriting quality of loans to mortgage delinquencies caused by job and income losses."

The percentages of loans 60 days past due, loans 90 days or more past due, and loans in foreclosure all set new record highs, breaking records set in the 3Q.The fourth quarter delinquency rate increased 72 basis points for prime loans (from 4.34% to 5.06%), 185 basis points for subprime loans (from 20.03% to 21.88%), 81 basis points for FHA loans (from 12.92% to 13.73%, and 24 basis points for VA loans (from 7.28% to 7.52%).