Unemployment helped push record numbers of American homeowners into delinquency or foreclosure on their home loans in the second quarter, a banking trade group said Thursday.
Slightly more than 13 percent of residential mortgage holders nationwide were at least one payment overdue or in foreclosure last quarter, according to the Mortgage Bankers Association.
That's the highest portion in the group's records, which started in 1972, and is up from 12 percent in the first quarter of the year.
California homeowners also set a record: Fifteen percent of mortgage holders were in trouble by the end of June, either in foreclosure or at least one month behind on their loan payments. That was up from 14 percent in the first quarter.
And continuing a trend that began early this year, the foreclosure rate among fixed-rate loans to borrowers with prime credit increased more than for adjustable-rate loans held by homeowners with poor credit.
Prime fixed-rate loans accounted for one in three foreclosure starts in the last quarter, according to Jay Brinkmann, chief economist for the mortgage bankers, compared with one in five a year ago.
The trend was similar in California. The rate of new foreclosures rose among prime fixed, prime adjustable and subprime fixed-rate loans, but dropped for the subprime adjustable-rate loans that were at the root of the foreclosure crisis.
"The main factors behind the prime loans going delinquent at this point is unemployment and home values," said Dustin Hobbs, a spokesman for the California Association of Mortgage Bankers. "We've worked our way through most of the bad subprime at this point."
Declining home values prompt a rise in delinquency rates because some homeowners whose mortgage debt is greater than the market value of their homes decide not to keep making payments on their loans. Some attempt to strike loan modification deals with their mortgage lenders; others simply await foreclosure.
At the end of June, 12 percent of prime loans and 43 percent of subprime loans in California were either past due or in the foreclosure process.
"It is unlikely we will see meaningful reductions in the foreclosure and delinquency rates until the employment situation improves," Brinkmann said.
On Thursday, the federal government announced that new unemployment claims rose to 576,000 last week from 561,000 the week before — hardly news that would indicate a near-term conclusion to the foreclosure crisis.
In a better sign for future home sales, however, Freddie Mac said Thursday that average rates for 30-year mortgages dropped to 5.12 percent from 5.29 percent last week.
California, Florida, Nevada and Arizona continued to dominate the nation in terms of foreclosure woes last quarter, the mortgage bankers said. Those four states accounted for 44 percent of newly begun foreclosures, down from a 46 percent share in the first quarter.
In Florida, the country's worst vortex for soured mortgages, nearly 23 percent of residential loans were at least one payment overdue or in foreclosure at the end of June.
