Industry News

Foreclosures, foreclosure starts hit record highs

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The rate of foreclosure starts and the percentage of loans in foreclosure hit record highs during the third quarter, suggesting 1.5 million homes will enter the foreclosure process in 2007, the Mortgage Bankers Association reported today. Subprime adjustable-rate mortgages (ARM) saw the sharpest increase in the rate of foreclosure starts, and continue to account for a disproportionate share of bad loans. While only about 6.8 percent of outstanding loans are subprime ARMs, those loans accounted for 43 percent of third quarter foreclosure starts, the MBA reported. The rate of foreclosure starts increased for all loan types, however -- including prime fixed-rate and adjustable-rate loans -- as falling house prices and a credit crunch in mortgage lending made it more difficult for homeowners to sell or refinance their way out of foreclosure. Delinquency rates were also up across all loan types, suggesting that the foreclosure picture will continue to worsen before it gets better, MBA Chief...