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1.5 Million Houses on the Brink of Foreclosure

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By : John Cutts    99 or more times read
The combined number of defaults and mortgage loans in foreclosure process has now reached its highest level of 11.18 percent, according to the Mortgage Bankers Associationís (MBA) National Delinquency report.

According to the MBA report, the percentage of homeowners who are behind on their loan payments for at least a month increased by 8 percent during the last quarter of 2008. The figures are the highest recorded by MBA since it started monitoring foreclosure homes rate in 1972. The last quarter data represented a 13 percent rise from the third quarter.

MBA chief economist Jay Brinkmann explained that subprime adjustable-rate mortgage loans and prime adjustable-rate mortgage loans still accounted for majority of loans on default and the increasing foreclosure homes rate.

He added that across the country, 48 percent of subprime adjustable-rate mortgages were one payment behind, while in Florida, 60 percent of subprime loans were on default for a month.

Meanwhile, the number of foreclosure homes filings increased to 3.3 percent, representing about 1.5 million houses at risk of falling into foreclosures.

The 3.3 percent increase in the number of foreclosure homes filings during the last quarter of the previous year represented a 0.33 percent increase from the previous quarter and 1.26 rise from 2007.

On the other hand, Brinkmann noted that the number of troubled loans languishing on the foreclosure market has remained significantly high because of the moratorium on foreclosure sales in several states, the suspension on foreclosure sales by Federal Home Loan Mortgage Corp. and Federal National Mortgage Association and reluctance of mortgage services to evict owners of foreclosure homes.

He pointed out that because of the foreclosure moratorium, the number of mortgage loans due 90 days and more increased to 3 percent in the last quarter from 2.2 percent the preceding quarter.

If there was no moratorium, these troubled mortgages would have been dealt with immediately by lenders by completing the process of foreclosure.

Harvard Universityís director of Joint Center for Housing Studies Nicholas Retsinas said that the MBA report reinforced what industry experts have been asking for a long time now, a foreclosure relief plan that will successfully streamline the number of foreclosure homes and stabilize the housing market.

Industry experts viewed Obamaís foreclosure prevention plan as another attempt to decelerate the foreclosure rate but doubted if it will ever solve the housing crisis.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.

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