WASHINGTON (AP)
-- Late mortgage payments shot up to a 3 1/2-year
high in the final quarter of last year and new
foreclosures surged to record levels as borrowers
with tarnished credit histories had trouble keeping
up with monthly payments.
The Mortgage Bankers Association, in its quarterly
snapshot of the mortgage market released Tuesday,
reported the percentage of payments that were
30 or more days past due for all loans tracked
jumped to 4.95 percent in the October-to-December
quarter.
That marked a sharp rise from the third-quarter's
delinquency rate of 4.67 percent and was the
worst showing since the spring of 2003, when
the late-payment rate climbed to 4.97 percent.
The association's survey covers 43.5 million
loans.
The latest snapshot of the mortgage market stoked
Wall Street investors' worries about troubles
facing "subprime" lenders who make
loans to people with poor credit. The Dow Jones
industrials tumbled 242.66 points.
The percentage of mortgages that started the
foreclosure process in the final quarter of last
year rose to 0.54 percent, a record high. The
previous high, 0.50 percent, occurred in the
second quarter of 2002 as the economy was recovering
from the blows of the 2001 recession.
Delinquency and foreclosure rates were considerably
higher for higher-risk subprime borrowers, especially
those with adjustable-rate mortgages.
Lenders to subprime borrowers -- people with
blemished credit histories -- have been battered.
Rising interest rates and weak home prices have
made it increasingly difficult for these borrowers
-- especially those with adjustable-rate mortgages
-- to keep up with their payments. Delinquencies
and foreclosures in the subprime mortgage market
are spiking.
The late-payment rate for all subprime loans
jumped to 13.33 percent in the fourth quarter,
up from 12.56 percent in the prior period and
the highest in four years. The delinquency rate
for subprime borrowers with adjustable-rate mortgages
was even higher -- 14.44 percent, also the highest
in four years.
"Unfortunately, it appears delinquency
rates will likely worsen before they improve," said
Gina Martin, economist at Wachovia Corp. Economics
Group.
The rate of all subprime loans starting the
foreclosure process at the end of last year was
2 percent, the highest in three years. The percentage
of subprime adjustable-rate mortgages entering
foreclosure soared to 2.70 percent, the second-highest
on record.
Doug Duncan, the mortgage association's chief
economist, suggested that borrowers having difficulties
making payments contact their lenders as soon
as possible to work together on the problem. "It
is in everyone's interest to keep the homeowner
in their home paying their bills on time," he
said.
Mounting concerns about risky mortgages have
been making investors jittery. Those fears contributed
to a worldwide stock meltdown on Feb. 27, where
the Dow Jones industrials suffered a 416-point
plunge.
Worried about defaults on high-risk mortgages,
federal bank regulators earlier this month called
on lenders to use caution in making subprime
loans and strictly evaluate borrowers' ability
to repay them.
New Century Financial Corp., which was the nation's
second-largest subprime mortgage maker, is scrambling
to stay afloat after all its bank lenders cut
off funding or informed the company of their
intent to do so because of its failure to make
payments. The Irvine, Calif.-based company already
has stopped accepting all new loan applications. |
