Foreclosures, late payments at new highs
March 13, 2007
According to the Mortgage Bankers Association, late mortgage payments were at 4.95 percent in the final quarter of 2006, a three and a half year high. That delinquency rate was up from 4.67 percent in the third quarter of last year and was the highest it has been since Spring 2003.
The rate for late payments was substantially higher on subprime mortgages, at 13.33 percent in the fourth quarter, up from 12.56 percent in the third quarter. Subprime late payments in the October to December quarter were the highest in four years. Additionally, late payments on adjustable-rate subprime mortgages in the fourth quarter were even higher, at 14.44 percent.
Foreclosure starts in the fourth quarter were at 0.54 percent, also a record high. The previous high, 0.50 percent, was reached in the second quarter of 2002. Like late payments, foreclosure rates were much higher on subprime mortgages.
The new numbers come just as New Century Financial (NYSE: NEW) seems likely to go under. The second-biggest subprime lender in the United States has quit accepting new loan applications as its bank lenders have cut off funding or have said they will do so. Bank regulators have cautioned subprime lenders to be cautious in granting supreme loans as defaults have risen.