The AP is reporting the news about subprime mortgages. The gist: the Mortgage Bankers Association reported Thursday that the percentage of payments that were 30 or more days past due for "subprime" adjustable-rate home mortgages increased to 15.75 percent in the January-to-March quarter, the highest on record. The prior quarter's delinquency rate was 14.44 percent.
The percentage of subprime adjustable-rate mortgages that started the foreclosure process in the first quarter of this year was 3.23 percent, also the highest on record. That was up from 2.70 percent in the final quarter of 2006 according to Doug Duncan, the chief economist for the MBA.
Here are some notes from the report at the Mortgage Bankers Assocation's website:
The rate of delinquencies is being driven by what is taking place in seven states. The percentage of loans in foreclosure would be well below the average of the last ten years were it not for Ohio, Michigan and Indiana, and the rate of foreclosures started nationwide would have fallen were it not for the big jumps in California, Florida, Nevada and Arizona. Those states have special circumstances that do not reflect what is happening in the rest of the country," said Doug Duncan, MBA's Chief Economist and Senior Vice President of Research and Business Development.
Regarding the situation in California, Florida, Nevada and Arizona, Duncan said:
"While foreclosure starts increased slightly from last quarter, thus setting another record, most of the increase was due to only four states, California, Florida , Nevada, and Arizona. Without these four states, foreclosure starts would have declined. 24 states saw a decline in foreclosure starts, while the rest of the states saw negligible increases, with the largest increases coming in Nevada (19 basis points), Florida (13 basis points), California (12 basis points), Maine (8 basis points), and Arizona (7 basis points)."
"Information provided to the MBA from a variety of sources indicates that the foreclosures in Florida, Nevada, California, and Arizona are heavily influenced by speculators who are walking away from properties now that home prices have started to fall in areas of those states and they face resets in the adjustable-rate mortgages they took out for these homes. In addition, speculators in Florida are also facing much higher insurance bills."
"Much attention has been paid to the performance of the subprime ARM market. The rate of foreclosures started on subprime ARMs jumped from 2.7 percent to 3.23 percent. However, the states mainly responsible for that increase were California, Florida, Nevada and Arizona. Twenty-six states had decreases in the foreclosure rates on subprime ARMs, and the national foreclosure rate on subprime ARMs would have slightly declined were it not for the increases in those four states."