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Nov 20, 2009 5:32 pm US/Eastern
Foreclosures Continue Rising For Fixed-Rate Homes
MIAMI (CBS4) ―
Main Street continues to suffer through the effects of what many have dubbed, "The Great Recession." According to a report from the Mortgage Bankers Association, 14 percent of homeowners with a mortgage were either behind on payments or in foreclosure at the end of September. Perhaps more troubling for an economic recovery is that a rising number of the foreclosures are among fixed-rate home loans made to people with good credit.
The numbers from the MBA were a record-high figure for the ninth straight fiscal quarter. Financial experts say the data shows the housing market and the overall recovery will be tenuous at best as the foreclosure crisis doesn't show any signs of letting up in the next several quarters.
Part of the problem behind the rise in foreclosures among fixed-rate customers is the nation's unemployment crisis. The U.S. currently has an unemployment rate of 10.2 percent, and in Florida where the housing bubble completely collapsed, unemployment is over 11 percent.
Analysts say there are still too many foreclosed homes that have yet to hit the market that could further depress prices across the country. Four states are suffering the most from the foreclosures crisis including Florida, California, Nevada, and Arizona.
In Florida, one in four mortgages were either past due or in foreclosure. The 25 percent rate was the highest in the nation, with Nevada just behind at 23 percent.
Prime fixed-rate loans to borrowers with good credit accounted for 33 percent of new foreclosures last quarter. Subprime mortgages with adjustable rates made up 16 percent of new foreclosures, which was a significant drop from 2008's number of 35 percent.
But, loans backed by the Federal Housing Administration are beginning to show signs of weakness. More than 18 percent of FHA borrowers are at least one payment behind or are in foreclosure. Typically, foreclosures peak about six months after the unemployment rate does following a recession. But, with unemployment not expected to peak until next spring or summer, the foreclosure crisis is likely to stick for the next two years.
(© 2010 CBS Broadcasting Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.)
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