Mortgage Bankers Association: With Moratoriums Ending, Foreclosures Rise 27%

Foreclosure starts jumped 27% in the first quarter to 1.33% of all outstanding residential loans as state foreclosure moratoriums expired and it became clear that certain at-risk homeowners couldn't qualify for government-mandated loan modification programs. At year-end the foreclosure start rate was 1.08%. According to figures compiled by the Mortgage Bankers Association, 9.12% of all home mortgages were in some stage of delinquency/foreclosure at the end of March. National Mortgage News estimates that consumers owe $9.585 trillion on their loans which means some $874 billion of residential loans are late. Also, one-quarter of all subprime loans ($188 billion, according to NMN) are delinquent, compared to 21.88% at year-end. MBA chief economist Jay Brinkmann said it is the highest jump in foreclosure starts ever, adding that 40% of starts involve vacant homes. Mr. Brinkmann noted that prime mortgages had the largest share (53%) of foreclosures starts. Also, prime adjustable-rate mortgages (which include option-ARMs and Alt-A loans) had a higher foreclosure start and a higher 90-day delinquency rate than Federal Housing Administration-insured mortgages. Meanwhile, the serious delinquency rate (loans 90 days or more past due or in foreclosure) rose 94 basis points in the first quarter to 7.28%. Compared to the fourth quarter, the seriously delinquent rate on prime loans jumped 96 bps to 4.7%. On subprime loans it jumped 177 bps to 24.9% and on FHA loans it rose 30 bps to 7.37%.