Home foreclosures at 30-year high |
By Thomas A. Fogarty, USA TODAY A record percentage of U.S. homeowners are facing foreclosure, and many more are falling behind on monthly house payments.
During April, May and June, 1.23% of mortgages — about 640,000 — were in the foreclosure process. That's the highest rate in its 30 years of tracking, the Mortgage Bankers Association said Monday. A year earlier, not even 1% of mortgages were in foreclosure.
Though the inclination might be to blame the economy, it's more than that, industry observers say. Other factors might be at work.
Changes in the way lending is done, for example, could help explain the trend. The past decade has brought a proliferation in mortgage products — including interest-only and low-down-payment loans. "Many of these products are being stress-tested for the first time in a recession," MBA chief economist Doug Duncan says.
The high level of foreclosures is surprising for two reasons, Duncan says: Economic conditions aren't all that dire, and previous surveys hadn't been showing a level of delinquencies that would predict record foreclosures.
John Karevoll, a DataQuick analyst who independently has tracked an uptick in foreclosures, says it might reflect greater willingness by lenders to use foreclosure to compel payment.
"I'm told they're starting to use the foreclosure process to crack the whip a little more than they once did," Karevoll says.
Housing remains strong in most markets, he says, giving the borrower or lender opportunity for a quick resale at a good price.
Other likely culprits:
The job market. Unemployment averaged 5.9% in the April-June quarter, a recent high. Homeowners out of work find it harder to make payments. Because the job market likely will remain soft, Duncan says, the proportion of borrowers under stress might stay high for six months or so.
Social policy. Government efforts to broaden home ownership have resulted in nearly 68% of Americans owning homes, a record. But the efforts also have meant lending to higher-risk borrowers. |
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