Washington - The number of US home loans in foreclosure rose to an all-time high at the end of 2007 pushed by so-called subprime loans to borrowers with poor credit, a report by the Mortgage Bankers Association said Thursday. The number of loans entering foreclosure on a seasonally adjusted basis increased to 0.83 per cent of loans from 0.54 percent a year earlier; and 2.04 per cent of all loans were in the foreclosure process in the fourth quarter, the report said.
Adjustable rate subprime loans that have spurred crises in the real estate and credit markets led the defaults, but foreclosures also increased among holders of more secure prime loans.
The percentage of homeowners who were more than 30 days late on a payment was the highest since 1985, at 5.82 per cent.
"Declining home prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state," Doug Duncan, the group's chief economist and senior vice president said in a statement.
In Ohio and Michigan, which are among the states with the highest percentage of foreclosures, he cited declines in demand for housing due to job losses and migration. In California and Florida - which account for 30 per cent of foreclosures, despite holding just 21 per cent of all loans - overbuilding has created a surplus of homes, he said.
Rising defaults kicked off concerns about the US economy over the summer, prompting the Federal Reserve to lower its benchmark interest rate twice this year in an attempt to avoid a recession. The Bush administration has encouraged mortgage lenders and home owners to work out compromises to avoid foreclosure.
