Late mortgage payments shot up to a 3½-year high in the final quarter of last year and new foreclosures surged to a record high as borrowers with tarnished credit histories had trouble keeping up with their monthly payments.
The Mortgage Bankers Association, in its quarterly snapshot of the mortgage market released Tuesday, reported that 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 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.
Let's look at those specifics.
1.) Late payments are at a 3.5 year high.
2.) New foreclosures are at a record high.
3.) The last time foreclosures were at this level was after a recession -- a period of lower economic activity. as the US economy is slowing, it's fair to say this level of foreclosures before a possible recession does not bode well.