Industry News

U.S. foreclosure starts hit new records

Falling home prices create less incentive to make payments
Published on Mar 6, 2008

Loans entered the foreclosure process at a record rate during the fourth quarter, and things are likely to get worse before they get better, the chief economist for the Mortgage Bankers Association said today. Although reductions in short-term interest rates have lessened the shock of interest-rate resets for many borrowers with adjustable-rate mortgage (ARM) loans, falling home prices are leaving more homeowners with little or no equity in their homes -- and less incentive to keep up on their mortgage payments, said MBA Chief Economist Doug Duncan. That's particularly the case in states such as California, Florida, Nevada and Arizona, where overbuilding created surplus inventories that will take some time to work through, Duncan said. The rate of foreclosure starts in Florida more than tripled between the fourth quarter of 2006 and the fourth quarter of 2007, and more than doubled in California. Nationwide, the rate of loans entering the foreclosure process hit a nev...

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