Home Foreclosures Skyrocket in the U.S.

[Apr 24, 2008.]

 

The last part of 2007 proved to be a troubling time for the nation's housing industry.

The Mortgage Bankers Association reports that home foreclosures leaped to a record high in the last quarter of the year. The industry group noted that the percentage of mortgages in the U.S. that faced foreclosure reached an all-time high of 0.83% from October to December. The previous high occurred a quarter earlier, when the rate shot up to 0.78%.

Association economist Doug Duncan told the Associated Press that the foreclosure rate is clearly the worst it's been. Meanwhile, the delinquency rate for mortgages rose to 5.82% in the final quarter of the year. That marked the second highest rate in more than 20 years. For the purposes of the rate, delinquency is defined as payments that are 30 or more days past due.

Those most affected by the foreclosure crisis appeared to be homeowners with subprime adjustable-rate mortgages. Both late payments and foreclosures rose to a record high for these mortgage-holders during the final quarter of 2007.

The foreclosure rate for subprime mortgages jumped to an all-time high of 5.29% in the 4th quarter. Meanwhile, late payments soared to 20.02% in the last quarter of the year.

The survey results involve nearly 46 million mortgages across the nation. Because of foreclosures, the supply of available houses outstrips the demand. As a result, homebuilders are expected to experience even larger reductions. According to Duncan, falling house prices are fueling the foreclosures. However, the rationale for the declines varies from state to state.

Federal Reserve Chair Ben Bernanke has said that both foreclosures and late payments are expected to increase "for a while longer." In fact, some experts predict that the current housing situation won't subside until the year 2010. The states of California and Florida appear to be hardest-hit by the foreclosure crisis.