Industry NewsMortgage

Dramatic increase in prime-loan foreclosures

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Foreclosure starts and foreclosure sales of homes purchased with prime loans increased dramatically from January to February, and the percentage of homes completing the foreclosure process approached highs not seen since last summer. The latest report from mortgage servicers participating in the lending industry's HOPE NOW alliance shows that despite continued strides in helping subprime borrowers avoid foreclosure, foreclosures and foreclosure sales among prime borrowers continue to climb. HOPE NOW put the number of foreclosure starts on prime loans during February at 157,000, a 25 percent increase from the month before. Foreclosure starts on subprime loans fell by 5 percent, to 86,000. The record 243,000 foreclosure starts recorded in February represented a 12 percent increase from the month before and a 36 percent increase from a year ago. While payment shock for subprime borrowers with adjustable-rate mortgage (ARM) loans was once viewed as a primary driver of delin...