Third Quarter Foreclosure Rate Jumps To Almost 3%, Delinquencies Surge To Record Level

Washington, D.C. (AHN) - Foreclosure rate in the world's largest economy increased by 2.97 percent as a record 1.35 million homes were in foreclosure in the third quarter, according to a report on Friday.

The Mortgage Bankers Association also said in a report today that the number of homeowners falling behind on their mortgages increased to a record 6.99 percent, compared to 5.59 percent a year earlier.

"We have not gone into past recessions with the housing market as weak as it is now, so it is likely that a much higher percentage of delinquencies caused by job losses will go to foreclosure than we have seen in the past," Jay Brinkmann, MBA's chief economist said in a statement on Friday.

The rise in delinquencies was mainly driven by an increase of loans with payments 90 days or more overdue, according to the report by the association.

The report showed that several of the troubled borrowers were registered in California and Florida, which led the delinquency rate higher across the country in the third quarter.

Brinkmann said that as the recession trails into 2009, the number would likely have fallen by several hundred thousand.

He added, however, that the effect of job losses and general economic deterioration make the 2009 outlook worse, "particularly if mortgage problems become more widespread."

The Mortgage Bankers Association report is based on 45.5 million mortgages, which accounts to almost 85 percent of the total number of first mortgages nationwide.