Industry NewsMortgage

Subprime lending meltdown seen as threat to economy

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The results of the latest quarterly survey of delinquency and foreclosure rates by the Mortgage Bankers Association helped send stocks down Tuesday, reflecting investors' views that the crisis in subprime lending won't be confined to real estate. The MBA survey found that 4.95 percent of mortgage loans were 30 days or more past due in the fourth quarter of 2006, up from 4.67 percent the previous quarter and approaching the 4.97 percent late-payment rate in the second quarter of 2003. A record .54 percent of mortgages entered the foreclosure process in the fourth quarter, raising the total percentage of loans in foreclosure to 1.19 percent, a 14-basis-point increase from the previous quarter. Late payments for subprime loans hit 13.33 percent, up from 12.56 percent in the third quarter, and the delinquency rate for subprime adjustable-rate mortgages hit 14.44 percent, a four-year high. The survey received more than the usual amount of attention because of the deepening probl...