Thursday, December 6, 2007

Foreclosures hit record high in third quarter

By percentage points, the rate of homes in foreclosure jumped 20 percent from the second quarter to the third.

The Mortgage Bankers Association in its quarterly snapshot of the mortgage market released Thursday said that the percentage of all mortgages nationwide that started the foreclosure process jumped to a record high of 0.78 percent during the July-to-September period. That surpassed the previous high of 0.65 percent set in the prior quarter.

Defaults also hit an all-time high:
The delinquency rate for all mortgages climbed to 5.59 percent in the third quarter. That was up from 5.12 percent in the second quarter and was the highest since 1986, the association said. Payments are considered delinquent if they are 30 or more days past due.

Homeowners with spotty credit who have subprime adjustable-rate loans were especially hard hit. Foreclosures and late payments for these borrowers also reached all-time highs in the third quarter.

All of this puts the “rate reset freeze” into starker relief.

Remember, it does not apply to homes in mortgage default, let alone all the way past that into foreclosure.

At the same time, this will probably increase pressure for a Fed rate cut. That, in turn, will probably tank the dollar.