More bad news for the struggling real estate market again today. According to the Mortgage Bankers Association, the number of mortgage holders entering the foreclosure process rose to an all time high during the April to June quarter.
The percentage of loans going into foreclosure jumped to a record 0.65 percent during the quarter. And this marks the third straight quarter in a row where foreclosures have climbed to record levels.
The scary part is that the troubles do not seem to be nearing an end. In addition to the rise in foreclosure proceedings, the quarter also saw a sizable 0.75% jump in the number of loans that moved into delinquency. Total loans entering delinquency rose to 5.12% of all home loans. That is a pretty scary figure. While it is true that not all delinquent loans will progress to the point of foreclosure, it sets the stage for more troubles ahead.
It appears as though the problem is going to continue to escalate as more adjustable interest rate loans get adjusted upwards during this year. It is estimated that 2 million adjustable loans will reset this year. The result is going to be huge jumps in mortgage payments for the holders of these adjustable interest rate loans. The effect of watching the mortgage payments double or even triple in cost is going to put a serious strain on households across the country.
For more about the foreclosure problem, and President Bush's newly proposed plans to help fight the current foreclosure crisis, be sure to read Jonathan Berr's article from last week on the President's new plan to bail out subprime mortgage holders.
[Thanks to pink hats, red shoes for the photo.]
Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor's Observer.
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