U.S. foreclosures hit record, to worsen

By Julie Haviv

NEW YORK (Reuters) - U.S. mortgage delinquency rates and the percentage of loans that entered the foreclosure process jumped in the third quarter, with both reaching record highs, the Mortgage Bankers Association said on Thursday.

The percentage of loans on which foreclosure actions were started rose to 1.42 percent, an all-time high, up from 1.36 percent in the second quarter and 1.07 percent in the third quarter of 2008, it said in its National Delinquency Survey.

Rising job losses propelled delinquencies and foreclosures, a trend that will continue into next year, the MBA said.

"It is all about unemployment, everything else is secondary," MBA chief economist Jay Brinkmann told Reuters.

"We expect unemployment to keeping rising into the first quarter of 2010, which means we will most likely see even higher rates of delinquencies and foreclosures," he said in an interview.

The U.S. unemployment rate reached a 26-1/2-year high of 10.2 percent in October.

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.64 percent of loans outstanding, up from 9.24 percent in the second quarter and 6.99 percent a year earlier, the MBA said.

The delinquency rate broke the record set last quarter, based on MBA data going back to 1972. The rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure.