Record Number of Homes in Foreclosure

Washington, DC, Sept. 5, 2008-- A record 1.249 million homes were in foreclosure during the second quarter of 2008, according to the Mortgage Bankers Association.

And new foreclosure proceedings were started on about 490,000 of the 45 million home mortgages serviced by MBA members. That's up 9 percent from the 448,000 starts recorded in the previous quarter.

Mortgage delinquencies continued their grim rise during the three months ended June 30, with 2.9 million homeowners falling behind on their loan payments, in addition to those already in foreclosure. Compared with a year ago, delinquencies are up more than 25 percent, while loans in foreclosure have nearly doubled. Both levels were the highest ever recorded by the survey.

"The national foreclosure numbers continue to be driven by the hardest hit states continuing to get much worse," said Jay Brinkmann, MBA's chief economist.

"The increases in foreclosures in California and Florida overwhelmed improvements in states like Texas, Massachusetts and Maryland."

California and Florida accounted for 39 percent of all foreclosures started during the quarter. Those two states as well as Nevada, Arizona, Michigan, Rhode Island, Indiana, and Ohio, all had foreclosure start rates higher than the national average.

Subprime adjustable rate mortgages, which represent only 6 percent of all loans outstanding, accounted for 36 percent of all foreclosures started during the quarter. That means 6.63% of all subprime ARMs went into foreclosure during the period - nearly 20 times the rate for fixed rate prime mortgages.

Brinkmann warned that it would be fruitless to try an call a bottom in this market any time soon.

"Real estate markets are local and some markets are already improving," he said in a statement. "For example, even Michigan, one of the worst hit markets in the country, has now gone three quarters with little to no increase in its rate of foreclosures. Likewise, Massachusetts showed a very large drop in foreclosure starts, perhaps signaling a bottom."