MBA: Foreclosures, Delinquencies Hit All-time High

Washington, DC, September 6, 2007--The number of Americans who may lose their homes to foreclosure rose to a record in the second quarter as late payments by subprime borrowers surged to one out of every seven loans.

The share of all mortgages entering foreclosure rose to 0.6% in the second quarter, an all-time high, from 0.58% in 2007's first three months, the Mortgage Bankers Association said in a report today. The number of subprime borrowers making late payments rose 14.82% from 13.77%.

A rise in overdue payments on U.S. home loans has roiled global markets as investors shy away from risk, driving down the value of mortgage-backed securities and cutting into the profit of lenders. More than 100 mortgage companies have halted operations or sought buyers since the start of last year.

“We've got a history of irrational borrowing, irrational lending, irrational homebuilding, and we now are getting an irrational market response to these numbers,'' said Jay Brinkmann, vice president of research and economics for the Washington-based bankers trade group.

Half of the $1.2 trillion in subprime mortgage-backed securities sold in the last two years were bought by investors in Europe and Asia, according to Brian Bethune, director of financial economics for Globe Insight Inc. in Waltham, Massachusetts. The bonds are held by hedge funds, pension funds, banks and private investors.

In the second quarter, 2.73% of prime borrowers made their mortgage payments at least 30 days late, up from 2.58% in the first quarter, the report said.

The Mortgage Bankers report is based on a survey of 44.2 million loans by mortgage companies, commercial banks, thrifts, credit unions and other financial institutions.