Delinquencies Rise, as do Foreclosures

       The number of homeowners entering into foreclosure has risen again, hitting a record high. The rate of delinquencies has also spiked in the recent quarter. The delinquencies hit over 5% of existing mortgages up almost a full point from last year. Delinquencies considered serious, meaning they are 90 days or more late have risen to 1.11% of all existing loans, up almost .2% since the first quarter of the year.  Existing loans actually filing for foreclosure rose to .65% of all mortgages, up from .58% from the beginning of the year. This is the highest rate in the Mortgage Bankers Association in their 55 year history. As home prices continue to depreciate, the auto industry continues to weaken, and interest rates continue to rise, many Americans are falling behind on their loans. Problems in the subprime mortgage sector had the most increases in foreclosure filings, although the entire housing industry has been hit hard. Seven states have been hit the hardest-Michigan, Indiana, and Ohio in the Midwest and Sunbelt states Arizona, California, Nevada and Florida. The Midwest states are suffering from job and economic issues with 300,000 jobs disappearing in Michigan alone. The Sunbelt states are seeing the results of investors driving up prices, and the depreciating values of homes-owners are no longer able to sell their homes for what they paid for them. In addition, with the latest housing crisis many would-be homeowners are unable to get large enough loans to pay for the outrageous prices of the majority of homes in the area, leaving many sellers but few buyers. Finally, the Sunbelt region is also suffering from the high number of adjustable rate mortgages that exist in the state as interest rates rise, an many could soon lose their homes if they are unable to afford the higher payments. Foreclosures and delinquencies are predicted to continue to rise throughout the next year. There is a large number of adjustable rate mortgages whose interest rates are set to rise this fall, and it is expected that many of those homeowners will fall behind on their payments, possibly leading to more foreclosures. While there are many ways for homeowners to avoid foreclosure, such as selling the home, work out agreements with the lender, or refinancing to a fixed rate mortgage, some will still be forced to go through the entire foreclosure process. A peak in the number of borrowers going through foreclosure is expected to peak next year.