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Gloomy foreclosure forecast

Mortgage problems expected to drag well into next year
Published on May 28, 2009

A record 12 percent of mortgages on one- to four-family homes were past due or in foreclosure at the end of March, the Mortgage Bankers Association reports, and the group is forecasting little chance that the situation will improve until unemployment peaks, perhaps next year.The foreclosure rate on prime fixed-rate loans has doubled in the last year, and now represents the largest share of new foreclosures, MBA Chief Economist Jay Brinkmann said in a statement. That points to the impact of the recession and unemployment on mortgage defaults, he said.MBA's forecast -- shared by the Federal Reserve and others -- is that the unemployment rate will not peak until mid-2010. Because mortgage performance lags behind employment trends, "it's unlikely we will see much of an improvement until after that," Brinkmann said.But Brinkmann said it's difficult to overstate the severe impact home-price declines have had on delinquencies and defaults in California, Florida, Arizona and Nevada.N...

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