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The number of loans entering foreclosure nationwide set a new record in the second quarter, breaking the one set the previous quarter, the Mortgage Bankers Association reported today.
The turmoil in a few large states — California, Florida, Nevada and Arizona — is driving the national foreclosure and delinquency rates, the group said.
From the MBA release, a quote from Doug Duncan, the group’s chief economist:
Were it not for the increases in foreclosure starts in those four states, we would have seen a nationwide drop in the rate of foreclosure filings. Thirty four states had decreases in their rates of new foreclosure and the increases were very modest in the states with increases, other than those four …
Duncan identified the payment-spiking reset period on adjustable-rate mortgages, especially those made to subprime or poor-credit borrowers, as a major culprit. And California definitely holds the lion’s share of the trouble. From a MarketWatch story on the report:
California has 17% of the subprime ARMs in the country and more than 19% of the foreclosure starts on subprime ARMs. California, Florida, Nevada and Arizona have more than one-third of the country’s subprime ARMs and more than one-third of the foreclosure starts on subprime ARMs.