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The economy and the stock market may be recovering from their swoon, but more U.S. homeowners than ever are having trouble making their monthly mortgage payments, according to figures released Thursday.
Nearly one in 10 homeowners with mortgages were at least one payment behind in the third quarter, the Mortgage Bankers Association said. That translates to about 5 million households.
The figures underlined the level of stress on a large segment of the country, a situation that could snuff out the modest recovery in home prices over the last few months and impede any economic rebound.
Unless foreclosure modification efforts begin succeeding on a permanent basis - a scenario that many analysts think is unlikely - millions more foreclosed homes will come to market.
"I've been pretty bearish on this big ugly pig stuck in the python and this cements my view that home prices are going back down," said housing consultant Ivy Zelman.
The overall third-quarter delinquency rate is the highest since the association began keeping records in 1972. It is up from about one in 14 mortgage holders in the third quarter of 2008.
The combined percentage of those in foreclosure as well as delinquent is 14.4 percent, or about one in seven mortgage holders.
Mortgages with problems are concentrated in four states: California, Florida, Arizona and Nevada. One in four people with mortgages in Florida are behind in their payments.
North Carolina is on track to exceed 60,000 foreclosure filings for the first time this year.
Mecklenburg County saw a 15 percent increase in foreclosure filings last month, compared with October 2008, according to an Observer analysis of state data. That's a big improvement from recent increases of more than 80 percent. However, the 1,129 filings mark the eighth consecutive month over 1,000 and accounted for more than one-fifth of the state's total.
Driven by rising unemployment, prime fixed-rate loans to borrowers with good credit accounted for nearly 33 percent of new foreclosures last quarter. That compares with 21 percent a year ago.
Many laid-off homeowners might be able to survive on their savings for a while, but "the longer the economic situation stays in place, the less likely they are to hold on," said Jay Brinkmann, chief economist at the Mortgage Bankers Association.
Some of the delinquent are scrambling and will eventually catch up on their payments. But many others will slide into foreclosure. The percentage of loans in foreclosure on Sept. 30 was 4.47 percent, up from 2.97 percent last year.
In markets where foreclosures already are high and still rising, prices likely will remain soft. That will cause developers to keep their bulldozers idle.
In the first stage of the housing collapse, defaults and foreclosures were driven by subprime loans. These loans had low introductory rates that quickly moved to a level that was beyond the borrower's ability to pay, even if he or she was still employed.
As the subprime tide recedes, the largest share of new foreclosures is high-quality prime loans with fixed rates. A third of the new foreclosures begun in the third quarter were this type of loan, traditionally considered the safest. But borrowers usually cannot pay their mortgages without jobs.
"Clearly the results are being driven by changes in employment," Brinkman said. The Associated Press contributed.
