The pace of foreclosures has stepped up considerably.
Nearly 1 in 8 of the nation's home mortgage holders were behind in their payments in the first quarter according to the Mortgage Bankers Association. It said more than 12% of residential mortgage loans were delinquent or in some stage of foreclosure.
What has changed is the shifting of the problem somewhat away from the subprime and option ARM/Alt-A loans to prime fixed-rate loans. The foreclosure rate on prime fixed-rate loans has doubled in the last year, and, for the first time since the rapid growth of subprime lending, prime fixed-rate loans now represent the largest share of new foreclosures. This points to the impact of the recession and drops in employment on mortgage defaults.
The housing bust has cycled from a sub-prime to Alt-A to now an employment issue. Since we were already in the midst of the drop when the layoffs began, those losing jobs had no way to sell their homes. Now even good borrowers with conforming loans are defaulting at a record rate.
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