Foreclosures Set Record
reuters.com
4th Quarter Home Foreclosures Set Record
Mon March 24, 2003 01:40 PM ET
By Mark Felsenthal
WASHINGTON (Reuters) - U.S. home loans in foreclosure in the fourth quarter of 2002 hit a record high as the weak economy forced a larger portion of mortgage holders out of their homes, a mortgage trade group said on Monday.
Loans in the process of foreclosure rose to 1.18 percent of mortgages, eclipsing the previous high level of 1.15 percent in the third quarter of last year, the Mortgage Bankers Association of America said.
But loans just entering the foreclosure process fell in the quarter, to 0.35 percent from 0.37 percent.
Also, the number of loans for one-to-four-unit residences that were delinquent -- at least 30 days overdue -- fell to 4.53 percent from 4.66 percent in previous quarter.
The trend signals that the worst may be over for people struggling to make their home loan payments -- as long as the economy rebounds, said Doug Duncan, chief economist for the trade group.
"The overall picture for foreclosures is that it appears that the share of loans entering the process of foreclosure is peaking and we're about two quarters after the peak in delinquencies," he told reporters during a telephone briefing.
Duncan said mortgage bankers expect delinquencies to fall, but only if the sluggish U.S. economy revives.
"We are seeing some signs of improvement, but absent a significant or sustained period of growth, expect no major improvement in delinquencies," he said in a statement.
Delinquencies for home loans not directly assisted by the government rose to 3.08 percent from 3.04 percent. Prime non- government home loans past due rose to 2.65 percent from 2.54 the previous quarter.
"In general an increase in delinquencies lags a downturn in the economy and a decrease in delinquencies lags an improvement in the economy," Duncan said.
Businesses have cut back on hiring and spending as the U.S. economy has remained weak, causing financial strains for many people. U.S. bankruptcies rose to a record level in 2002.
Unemployment is the main reason people fall behind on or are unable to make their home payments, Duncan said. Mortgage bankers are worried the economy has not added new jobs in recent months, he said.
"We are concerned that economic recovery is crucial to improved employment and thus to driving a decline in delinquencies," Duncan told reporters.
The Federal Reserve said last week that recent labor market indicators were disappointing. February nonfarm jobs sank by an unexpectedly large amount and weekly jobless claims numbers have remained high. |
