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Foreclosures Climb to Record Highs

Despite improvement in some states, the hardest-hit states continue to influence national numbers

By Shannon Petrie, FrontDoor.com | Published: 9/12/2008

According to a report released Aug. 5 by the Mortgage Bankers Association, national foreclosure rates are still looking grim. During the second quarter of 2008, a record 1.2 million homes were in foreclosure.

Other foreclosure statistics from the second quarter include:

  • New foreclosures reached 1.19 percent, rising above 1 percent for the first time in the survey's 29 years.
  • The total inventory of homes in foreclosure reached 2.75 percent, up from 2.47 percent in the first quarter.
  • The delinquency rate -- or the number of loans with one or more payments overdue -- rose to 6.41 percent of all mortgages, the highest ever recorded in the survey's 39-year history, from 6.35 percent in the first quarter.

Foreclosures have previously been driven by subprime loans, but the problem is now spreading to prime loans as well.

"Subprime ARM loans accounted for 36 percent of all foreclosures started and prime ARMs, which include option ARMs, represented 23 percent," said Jay Brinkmann, MBA chief economist and senior vice president for research and economics. "However, the increase in prime ARMs foreclosure starts was greater than the combined increase in fixed-rate and ARM subprime loans," he added.

The good news, said Brinkmann, is that several states, including Texas, Massachusetts and Maryland, are showing improvement.

However, national numbers won't improve until California and Florida -- accounting for 39 percent of all foreclosures started nationally in the second quarter -- start to show a turnaround.

The wide availability of foreclosures means more opportunities for buyers looking for a bargain. Visit our Foreclosure Guide for Homebuyers to learn how to buy a foreclosure.

Read the Top 10 Real Estate Trends You Have to Know:

  1. Homes in foreclosure reach record highs
  2. Home prices continue to fall
  3. It's harder to get a mortgage
  4. Bad real estate agents will get weeded out
  5. Mortgage rates are still at historic lows
  6. Urban areas are making a comeback
  7. Bigger is not always better
  8. Buyers are going green
  9. Technology and social networking are changing how we buy and sell homes
  10. Flipping is out, buying and holding is in

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