US Foreclosure risk on rise, analysts say

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Wednesday, 24 August 2011 05:52

The Mortgage Bankers Association said yesterday that 8.4 percent of homeowners missed at least one mortgage payment in the April-June quarter.

That figure rose 0.12 percentage point from the January-March period.

In a normal market, the percentage of delinquent borrowers is about 1.1 percent, according to the trade group.

Delinquent mortgages have plummeted from a record high of more than 10 percent of residential mortgages a year ago.

But the decline is due partly to delays in foreclosure filings that are backlogged in state courts, including in Florida, New Jersey, Illinois, and New York.

The end of a state and federal investigation into faulty foreclosure paperwork will probably lead to more foreclosures later this year.

Analysts say the increase is especially worrisome because it is due mainly to high unemployment, which tends to raise the number of missed payments and foreclosures over time.

Once delayed foreclosures are restarted, the economy could suffer a hit.

“The current processing delays mean this will not happen quickly, underlining our view that both the housing market and the economy will remain weak for a few years,’’ said Paul Dales, senior US economist at Capital Economics.