$750 Billion in Mortgage Debt Overdue

The national mortgage delinquency rate — which includes both prime and subprime mortgages — climbed to a record 7.88% in the fourth quarter with subprime late payments reaching a staggering 21.88%, according to new figures released Thursday morning by the Mortgage Bankers Association. Figures compiled by National Mortgage News show that Americans owe $9.6 trillion on their loans which means $756 billion in residential mortgage debt is delinquent. Also, $196 billion in subprime debt is 30 days or more late. Prime foreclosures started in the quarter increased to 1.88% of outstanding loans, double last year's rate. The only positive in the numbers: the rate at which homes are going into foreclosure was flat but as MBA chief economist Jay Brinkmann noted: "This is mainly attributable to various state and local moratoria on foreclosure sales" and similar actions taken by Fannie Mae and Freddie Mac. He added at a conference call "It is really driving a build up in the 90-day or more [past due] bucket. More loans are being held in that bucket as opposed to what is being sent into foreclosure." But even though the rate of foreclosures may be flat the foreclosure inventory numbers are huge: 6.30% of all loans, and 23.11% of subprime mortgages are seriously delinquent or in foreclosure. The South and Midwest have the highest delinquency rates: 9.4% and 9.58%, respectively. Mr. Brinkmann said he expects the Obama foreclosure prevention efforts "will be beneficial" to the rate of foreclosures and delinquencies in 2009, yet difficult to quantify. "When you break out what loans stay in foreclosure, what percentage of those are vacant properties, for example we hear from Freddie Mac about 40% of their loans are in foreclosure...so clearly the plan can help."