One in Ten Americans Behind in Mortgage Payments
The Mortgage Bankers Association (MBA) in its latest survey on Friday showed that one in 10 American households with mortgages is overdue on payments or in foreclosure.
The MBA survey showed that 10% of mortgages on one- to four-family homes were at least a month overdue or in the foreclosure process in the third quarter. That is up from 9.2% three months earlier and 7.3% a year ago. The current level is the highest since the trade group began such surveys four decades ago.
For prime loans, 5.9% of loans were past due or in foreclosure in the latest quarter. For subprime loans, those for people with weak credit records or high debts in relation to income, the rate was about 33%.
The recent surge in unemployment is likely to push foreclosure and delinquency rates higher in 2009, said Jay Brinkmann, chief economist of the association. "We have not gone into past recessions with the housing market as weak as it is now," he said.
The Bush administration is grappling with how best to stem the tide of foreclosures. On Thursday, Federal Reserve Chairman Ben Bernanke called for aggressive action and endorsed several ideas, including a plan that would have the U.S. buy delinquent mortgages and refinance them. He also offered support for a loan-guarantee plan pushed by Federal Deposit Insurance Corp. Chairman Sheila Bair.
But there is little agreement within the administration about how to proceed. The Treasury Department and the White House have resisted Ms. Bair's plan, arguing that it could cause people to stop paying their loans and encourage banks to foreclose. There is also concern within the Treasury about Mr. Bernanke's idea of buying delinquent mortgages; some officials worry it is too complicated and would take too long to put into effect.
The Treasury has been working on its own proposals, including trying to fix the problems it sees with Ms. Bair's plan, as well as other proposals that would encourage banks to lower interest rates on certain loans. The Treasury is considering a plan that would push interest rates down to 4.5% for newly issued home loans.
Published on December 8, 2008
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