The weak economy pushed a record number of U.S. home loans into foreclosure in the fourth quarter of 2002, a mortgage trade group said Monday.
Loans in the process of foreclosure rose to 1.18% of mortgages, eclipsing the previous high level of 1.15% in the third quarter of last year, the Mortgage Bankers Assn. of America said.
But loans just entering the foreclosure process fell in the quarter, to 0.35% from 0.37%.
The trend signals that the worst may be over for people struggling to make their home loan payments -- as long as the economy rebounds, said Doug Duncan, chief economist for the trade group.
"It appears that the share of loans entering the process of foreclosure is peaking and we're about two quarters after the peak in delinquencies," he said.
Duncan said mortgage bankers expect delinquencies to fall, but only if the sluggish U.S. economy revives.
"We are seeing some signs of improvement, but absent a significant or sustained period of growth, expect no major improvement in delinquencies," he said.
Delinquencies for home loans not directly assisted by the government rose to 3.08% from 3.04%. Prime non-government home loans past due rose to 2.65% from 2.54% the previous quarter.
Businesses have cut back on hiring and spending as the U.S. economy has remained weak, causing financial strains for many people. U.S. bankruptcies rose to a record level in 2002.
Unemployment is the main reason people fall behind or are unable to make their home payments, Duncan said. Mortgage bankers are worried the economy has not added new jobs in recent months, he said.
"Economic recovery is crucial to improved employment and thus to driving a decline in delinquencies," Duncan said.
The Federal Reserve said last week that recent labor market indicators were disappointing.
February nonfarm jobs sank by an unexpectedly large amount and weekly jobless claims numbers have remained high.