Thurs Mar 5 2009 News Snippets

12 pct. are behind on mortgage or in foreclosure

A stunning 48 percent of the nation's homeowners who have a subprime, adjustable-rate mortgage are behind on their payments or in foreclosure, and the rate for homeowners with all mortgage types hit a new record, new data Thursday showed.

But that's not the worst of it.

The reckless lending practices in states like Florida, California and Nevada that were the epicenter of the housing crisis are no longer driving up the nation's delinquency rate. Instead, the foreclosure crisis now is being fueled by a spike in defaults in states like Louisiana, New York, Georgia and Texas, where the economies are rapidly deteriorating and thousands are losing their jobs.

A record 5.4 million American homeowners with a mortgage of any kind, or nearly 12 percent, were at least one month late or in foreclosure at the end of last year, the Mortgage Bankers Association reported. That's up from 10 percent at the end of the third quarter, and up from 8 percent at the end of 2007.

The only bright spot in the report is the devastation wrought by subprime ARMs appears to be waning. Their 30-day delinquency rate continues to fall and is at the lowest point since the first quarter of 2007.

That offers little reassurance to Florida, where 60 percent of homeowners who have a subprime ARM are at least one payment behind and one in five of all mortgage holders aren't current.
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House approves mortgage revision

Struggling homebuyers would get new leverage to force banks to renegotiate their mortgages under a bill that passed the House on Thursday on a vote of 234-191.
Centrist Democrats received concessions from Speaker Nancy Pelosi, California Democrat, on the original bill, winning changes to require borrowers to make more efforts to rework their loans and monthly payments with lenders before resorting to bankruptcy courts. The bill faces an uncertain fate in the Senate, which is expected to consider it in the coming weeks.

Underscoring the extent of the housing crisis, the Mortgage Bankers Association said Thursday that nearly 12 percent of U.S. homeowners were in foreclosure or behind on their payments at the end of 2008.

The trade group said mortgage delinquencies were the highest in records dating to 1972, while loans in foreclosure rose to 3.3 percent, also an all-time high.

Senate Democrats, led by Richard J. Durbin of Illinois, recently won agreement from industry giant Citigroup for a bankruptcy "cram-down" provision even more restrictive than the House measure, but virtually no other major bank or industry lobby has signed on to the Citigroup plan.