Mortgage delinquency rate rises

The number of Americans who fell behind on their mortgage payments rose to a 20-year high in the third quarter as borrowers were unable to refinance or sell their homes.

The share of all home loans with payments more than 30 days late rose to a seasonally adjusted 5.59%, the highest since 1986, the Mortgage Bankers Assn. said Thursday. New foreclosures hit an all-time high for the second consecutive quarter in a survey that dates to 1972.

The surge in foreclosures is expanding the inventory of unsold homes and contributing to the decline in home prices. Sales of new and previously owned homes probably will drop to 5.09 million next year, 32% below the 2005 peak of 7.46 million, said Frank Nothaft, chief economist of Freddie Mac, the second-largest U.S. mortgage buyer. About 40% of lenders have increased standards for their most creditworthy borrowers, an October Federal Reserve study found.

“These are the first numbers we’ve seen that combine the meltdown of the credit markets with the drop in home prices,” said Jay Brinkmann, vice president of research and economics for the Washington-based bankers trade group.

As the U.S. housing slump enters its third year, investors are shunning securities backed by mortgages, the top 15 U.S. home builders have lost about $35 billion in market value this year and the inventory of unsold houses has risen to almost an 11-month supply, the highest in 22 years.

The Mortgage Bankers report is based on a survey of 45.4 million loans by mortgage companies, commercial banks, thrifts, credit unions and others.