NEW YORK (CNNMoney.com) -- More home owners than ever are losing the battle to make their monthly mortgage payments.
Two percent of all mortgages are currently in foreclosure, according to a survey by the Mortgage Bankers Association, the highest rate in the report's quarterly history. Foreclosures started during the quarter also hit a record, amounting to 0.83% of home loans.
Additionally, payment delinquencies for mortgage borrowers during the last three months of 2007 were at their highest rate since 1985.
"Declining home prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state," said Doug Duncan, MBA's Chief Economist said in a prepared statement.
The foreclosure rates for prime and subprime adjustable rate mortgages both more than doubled compared with a year ago, from 0.41% for prime ARMs to 1.06% and from 2.70% for subprime ARMs to 5.29%.
But it was subprime ARMs that contributed most heavily to the nation's soaring foreclosure rates. Many of these loans come with low introductory rates that reset higher, often to unaffordable levels, in two or three years. Although they represent only 7% of all outstanding mortgage loans, they accounted for 42% of foreclosure starts during the quarter.
Delinquencies, or payments that are 30 days or more late, stood at 5.82% of outstanding mortgages, up from 5.59% during the three months ended September 30, 2007, according to the MBA. In the last quarter of 2006, the rate was 4.95%.
"In states like Ohio and Michigan, declines in the demand for homes due to job losses and out-migration have left those looking to sell their homes with fewer potential buyers, particularly with the much tighter credit restrictions borrowers now face," said Duncan. "In states like California, Florida, Nevada and Arizona, overbuilding of new homes created a surplus that will take some time to work through." See Also
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