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Economy in Brief

U.S. Mortgage Foreclosures Rose Further
by Tom Moeller June 5, 2008

The Mortgage Bankers' Association reported that during the 1st quarter of this year, foreclosures were started on .99% of all mortgages outstanding. That latest level was again by far the highest foreclosure rate on record. Foreclosure rates on both prime and subprime mortgages rose sharply.

Foreclosures on all prime mortgage loans rose to 0.54% of loans outstanding from 0.41% during 4Q '07. The latest remained nearly double the rate during the prior nine years.

Rates for prime fixed rate mortgages rose slightly to 0.29% of loans outstanding from 0.22% during 4Q. There were 27.7 million of these loans on the books. Of the 6.4 million prime adjustable rate mortgages outstanding, the foreclosure rate rose to 1.55%, up from quarterly rates near 0.2% a few years ago.

As bad as the above data on prime debt was, the figures on subprime mortgage debt continued far worse. In total, the rate of foreclosure on subprime mortgages rose to 4.06% of outstanding loans during 1Q '08. There were 5.5 million of these loans in the "pool."

The foreclosure rate on subprime fixed rate debt rose to 1.80% of loans outstanding. That was up by more than half from the quarterly running rate in early 2006.There were 2.7 million of these loans outstanding. On variable rate subprime debt foreclosures also surged to 6.35% of loans outstanding from 5.29% during 4Q. There were 2.6 million of these loans on the books.

By the country's regions the Northeast saw an increase in the overall rate of foreclosure to 0.71% last quarter from 0.51% during 1Q '07. In the Midwest that rate rose to 0.98% from 0.79% a year earlier. The West saw an increase to 1.21% of loans outstanding from 0.49% in 1Q '07 and in the South foreclosures were started in 1Q on 0.96% of loans versus 0.54% one year earlier.

Today's testimony by Fed Vice ChairmanDonald L. Kohn, Condition of the Banking System, can be found here

These data series are available in Haver's MBAMTG database.

Mortgages in Foreclosure (%) 1Q '08 4Q '07 1Q '07 2007 2006 2005
All Mortgages 0.99 0.83 0.58 2.84 1.84 1.64
   Conventional Prime 0.54 0.41 0.25 1.30 0.77 0.72
     Fixed Rate 0.29 0.22 0.17 0.79 0.56 0.61
     ARM 1.55 1.06 0.53 3.23 1.19 0.75
   Subprime 4.06 3.44 2.43 11.71 7.23 5.66
     Fixed Rate 1.80 1.52 1.30 5.55 4.24 4.33
     ARM 6.35 5.29 3.23 17.08 8.80 6.07
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