Late Mortgage Payments Continue to Climb

By Ruth Simon, The Wall Street Journal

RISMEDIA, Sept. 24, 2007-(WSJ.com)-Mortgage delinquencies jumped again in August, according to new data from Equifax and Moody’s Economy.com. The new data provide the first big-picture look at how the credit crunch is hitting homeowners.

Nationwide, 3.56% of mortgages were at least 30 days past due last month, up 0.31 percentage points from July. The delinquency rate has increased about 1.5 points since bottoming out at the end of 2005, with fully half of that increase coming in the last three months.
Delinquencies have climbed since August 2006 in all 50 states, and 10 states have posted an increase of more than one percentage point. The rise in bad loans is “broad based,” says Mark Zandi, chief economist at Moody’s Economy.com. “That signals that foreclosure problems are going to be widespread.”

The share of problem loans has increased most sharply over the past year in Florida, Arizona and Nevada. Those three states — and California and New York — saw the highest increase in the rate of foreclosures.

Until recently, rising home prices made it easy for many borrowers who had trouble paying their bills to refinance or sell their home. But many lenders loosened their standards in recent years, and, as home-price growth slowed, borrowers in trouble found tougher to work out their problems. The pain has been exacerbated by a credit crunch that has made it even tougher for borrowers to refinance, cut demand for homes and produced a wave of job losses in the mortgage industry. The rise in delinquencies has also caught the attention of bank regulators, who have issued new mortgage guidelines.

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