The Real Deal Miami

MBA says more prime loans facing trouble

November 20, 2009 04:37PM

Prime fixed-rate loans are accounting for 33 percent of foreclosures, as opposed to subprime loans, which had been the culprit at the beginning of the housing crisis, according to the most recent data from the Mortgage Bankers Association. Federal Housing Administration-backed loans also played a role, with the rate of foreclosures on FHA loans outpacing the rate at which the loans are being taken out, according to CNBC’s Diana Olick. This is typical for FHA loans, however, said Jay Brinkmann, chief economist with the Mortgage Bankers Association, because FHA loans often go to riskier borrowers. “Keep in mind that any time you have the economic downturn, the FHA is always affected more than the prime market,” said Brinkmann, adding that the crisis is extending beyond the usual suspects — Florida, Nevada, California and Arizona — which had seen the bulk of national foreclosures in the past. “In otherwise unaffected states, the unemployment is spreading and it’s impacting every place and foreclosure has become much more of a national issue than it was before.”