Foreclosure starts reach record high, MBA finds

May 28, 2009 11:50AM

A record number of foreclosure actions were initiated in the first quarter of 2009, according to a nationwide survey released today by the Mortgage Bankers Association.

Foreclosure actions were initiated on 1.37 percent of first mortgages, according to the MBA’s National Delinquency Survey, an increase of 36 basis points from the same period last year and 29 basis points from the fourth quarter of 2008.

The seasonally adjusted delinquency rate for mortgage loans for one-to-four-unit residential properties was 9.12 percent at the end of the first quarter of 2009, up 277 basis points from one year ago — the highest rate the MBA has measured since 1972, when the association first started keeping records.

Most of the foreclosures are concentrated in Florida, California, Arizona and Nevada, the survey found, with those states accounting for 46 percent of the country’s foreclosure starts.

MBA Chief Economist Jay Brinkmann attributed the record-setting increases in part to the recent lifting of temporary Fannie Mae and Freddie Mac bans on foreclosure.

Moreover, the figures also represent a shift in delinquencies from subprime loans to traditional prime, fixed-rate loans as a result of the recession and unemployment, he said. The foreclosure rate on prime fixed-rate loans has doubled in the past year and those loans now represent the largest share of new foreclosures.

Because the unemployment rate is not expected to hit its peak until mid-2010, it’s unlikely that the level of mortgage defaults will begin to fall until then, the report says. TRD