The rate of delinquent U.S. mortgages continues to grow sequentially and that did not change in the second quarter as even more struggling borrowers fell at least 30 days behind on their loan payments.
The Mortgage Bankers Association (MBA) announced Thursday that 9.24 percent of all U.S. mortgages were in a delinquent status at the close of the second quarter. That marks the fourth consecutive months of increase and also sets a new all-time record on data dating back to 1972. The previous record was set just last quarter, as the first three months of 2009 saw a delinquency rate of 9.12 percent.
Loans that are considered delinquent are those that are at least 30 days past due on payment, but have not yet reached the foreclosure stage. The percentage of loans that were in foreclosure at the end of the quarter rose to 4.3 percent, up about half a point from the first quarter.
What’s troublesome is that the rising delinquencies are not linked just to subprime loans anymore, both prime loans and FHA loans saw delinquency rates rise. Delinquent FHA loans soared to 14.42 percent as loan modification and refinancing programs from the Obama Administration have not taken hold as aggressively as planned.
Subprime still remains a main concern though. The delinquency rate hit a whopping 25.3 percent in the second quarter.
Foreclosure rates do still remain relatively low for prime loans, 3.00 percent and FHA loans, 2.98 percent, but with the ever increasing rate of delinquencies that may only last so long.
The MBA said in its statement that modification programs have held foreclosures below where they would otherwise be, but that many foreclosures cannot be helped as borrowers have either vacated the home or no longer have jobs.
Looking ahead, MBA Chief Economist Jay Brinkmann had this to say in a MBA press release: “As for the outlook, it is unlikely we will see meaningful reductions in the foreclosure and delinquency rates until the employment situation improves. In addition, in some areas where a number of borrowers have mortgages that are larger than the current value of their homes, any life events such a divorce or loss of a job are likely to translate into foreclosures until prices in those areas recover, not just flatten.”
