U.S. mortgage crisis is intensifying

The mortgage crisis is spreading and hitting new heights: Borrowers with good credit now make up the largest share of foreclosures as job losses and pay cuts exact their toll.

A record 12 percent of homeowners with a mortgage were behind on their payments in the first quarter, the Mortgage Bankers Association said Thursday. And the trend is predicted to continue until the end of next year, about six months after unemployment is expected to peak.

The states with the highest overall delinquency rates in the first quarter were Nevada at 11.75 percent, Mississippi at 11.70 percent and Florida at 10.67 percent, compared to an 8.22 percent national average.

Based on foreclosure inventory, the states with the highest rates were Florida at 10.56 percent, Nevada at 7.83 percent and Arizona at 5.56 percent, while the nationwide average for the period was 3.85 percent.

The states with the most homes going into foreclosure during the first three months of the year were Nevada at 3.35 percent, Florida at 2.79 percent and Arizona at 2.52 percent.

Utah ranked well below the national average in each category, with a delinquency rate of just over 6 percent for the quarter — 37th among states (including the District of Columbia and Puerto Rico) — and a foreclosure rate of 2.36 percent — 31th among states. The Beehive State had 1.06 percent of homes go into foreclosure during the period, below the nationwide average of 1.37 percent.

Nationally, the foreclosure rate on prime fixed-rate loans doubled in the last year and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were past due or in foreclosure.

At the same time, almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure.

The worst of the trouble continues to be centered in California, Nevada, Arizona and Florida, which accounted for 46 percent of new foreclosures in the country. There were no signs of improvement.

The pain, however, is spreading throughout the country as job losses take their toll. The number of newly laid-off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record. These borrowers are harder for lenders to help with loan modifications.

MBA's chief economist Jay Brinkmann estimates the unemployment rate will top out in mid-2010 and foreclosures to abate about six months afterward.

President Barack Obama's recent loan modification and refinancing plan might stem some foreclosures, but not enough to significantly alter the crisis.

"It may be too much to say that numbers will fall because of the plan," Brinkmann said. "It's more correct to say that the numbers won't be as high."

Contributing: Associated Press

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