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More empty houses are appearing and late payments are
up too, a trade group reports.
Jeannine Aversa | The Associated Press
June 6, 2008
WASHINGTON - The foreclosure hammer is hitting ever harder. People lost their
homes at the highest rate on record in the first three months of the year, and
late payments soared to a new high, too.
Dumping more empty homes on an already glutted market also is likely to put a
further drag on home prices -- extending a vicious cycle.
Slumping home values are being blamed in large part for the rising tide of
foreclosures. Troubled borrowers are left owing more to the bank than their
homes are worth. They can't sell without taking a huge financial hit, so they
just walk away.
In fact, Americans' equity in their homes -- usually their single biggest asset
-- now has dropped to the lowest level on record in figures going back to the
end of World War II. Homeowners' portion of equity fell to 46.2 percent, which
means the amount of debt tied up in their homes exceeds the equity they have
built up.
"The economy is treading water, and the housing market is one of the
undercurrents trying to pull it down," said Stuart Hoffman, chief economist at
PNC Financial Services Group.
Nearly 1 percent, or roughly 447,723 loans, fell into foreclosure during the
January-to-March period, the Mortgage Bankers Association said Thursday in its
quarterly snapshot of the mortgage market. That surpassed the previous high of
0.83 percent during the last three months in 2007.
The report also found that more homeowners slipped behind on their monthly
payments. The delinquency rate jumped to 6.35 percent -- or 2.87 million loans
-- compared with 5.82 percent for the previous three months. Payments are
considered delinquent if they are 30 or more days past due.
Both the rate of new foreclosures and late payments were the highest on record
going back to 1979.
California, Florida, Nevada and Arizona accounted for 89 percent of the total
increase in new home foreclosures, he said. Those are places where prices have
fallen sharply and there was a lot of home building, creating too much supply,
said Jay Brinkmann, the association's vice president of research and economics.
Copyright © 2008, Orlando Sentinel