More Foreclosures Started in Q2
Foreclosure starts increased in the second quarter, according to the Mortgage Bankers Association, as banks take another step to move the 'shadow inventory' of distressed houses back to the market.
Banks nationwide are continuing to play catch-up on distressed homes, as foreclosure starts rose in the second quarter for the first quarterly increase since the end of 2009.
The residential delinquency rate jumped 18 points in the second quarter, to a seasonally adjusted rate of 7.58 percent of all outstanding mortgage loans, according to the Mortgage Bankers Association (MBA). The new rate is still below the second quarter of 2011, however, by 86 points.
New foreclosure filings were down for most loan types, MBA chief economist Jay Brinkmann said, but a surge in Federal Housing Authority (FHA) foreclosure starts overwhelmed those numbers. ''The jump was due to one or more large servicers of FHA loans restarting foreclosure actions on delinquent FHA loans after the completion of the Department of Justice review and the mortgage servicing settlement.''
The $25 billion settlement, reached in April, ended a mortgage abuse scandal that lasted over a year.
''Mortgage delinquencies were up only slightly over the last quarter … revers[ing] the trend of fairly steady drops in delinquencies we have seen over the last year,'' Brinkmann said. ''This is consistent with the slowdown in the economy during the first half of the year and our stubbornly high unemployment rate. Whether this is just a temporary blip or a sign of a true change in direction for mortgage performance will depend on the direction of employment over the remainder of the year.''
Brinkmann said that Maryland had the highest rate of new foreclosure actions, more than double the national average. New rules that delayed foreclosures in the state of Washington are also resulting in statistical bulges as activity resumes, but surges in foreclosure starts in those states were matched by the biggest drop of all states in the number of its loans that were 90 days or more past due.
Florida continues to lead the nation with 13.7 percent of mortgages in foreclosure, more than triple the national average, followed by New Jersey at 7.7 percent, Illinois at 7.1 percent, and New York at 6.5 percent. In contrast, two of the states that were hardest hit, Arizona and California, now have rates of 3.2 and 3.1 percent respectively, both more than a full percentage point lower than the national average.