Delinquencies Driven By Prime and FHA Loans

Florida, California, Arizona and Nevada had 43% of all foreclosures started in the third quarter, down only slightly from 44% in the second quarter and the third quarter last year, according to the Mortgage Bankers Association's National Delinquency Survey.

These four states had 37% of the nation's prime fixed-rate loan foreclosure starts and 67% of the prime ARM foreclosure starts. As of the end of September, 25% of the mortgages in Florida were at least one payment past due or in foreclosure.

"The outlook is that delinquency rates and foreclosure rates will continue to worsen before they improve,” said Jay Brinkmann, MBA's chief economist. “It is unlikely the employment picture will get better until sometime next year and even then jobs will increase at a very slow pace. Perhaps more importantly, there is no reason to expect that when the economy begins to add more jobs, those jobs will be in areas with the biggest excess housing inventory and the highest delinquency rates.”