Foreclosure Rate Is Gathering Steam

Hedge fund managers, mortgage brokers, and title-insurance company employees are not the only people to suffer from the housing-market meltdown.

Anyone who needs to be reminded need look no further than the Mortgage Bankers Association's latest National Delinquency Survey.

The number of people at risk of losing their homes is soaring. Fully 5.12 percent of all loans for one- to four-unit residential properties were delinquent in the second quarter, the association said. That's almost 17 percent higher than the delinquency rate of a year earlier.

That's just people behind in their payments. The number of people actually in foreclosure—that is, actually losing their houses—rose to 1.40 percent of all loans outstanding at the end of the second quarter. That's a 40 percent increase over the same period a year earlier.

And people are falling into foreclosure at an accelerating rate. The pace jumped by 50 percent last quarter, to the highest rate in the history of the survey. The previous record occurred in the previous quarter.

The Midwest—particularly Ohio, Michigan, Indiana, and Illinois—remain in trouble, as do Kentucky, Tennessee, and Pennsylvania. Now the problem is spreading to the former boom states of California, Florida, Nevada, and Arizona.

by Mark Stein