Delinquencies and defaults on mortgage loans, as well as foreclosures on homes, are soaring, despite the well-advertised efforts of politicians and economists. New waves of foreclosures and delinquencies could be up ahead, too, as the recession continues.

According to the Mortgage Banker's Association (MBA), the number of people in the U.S. who are behind on their mortgage loans hit a new record in the third quarter of 2008. Now, almost seven out of every 100 home loans is in delinquency. That means that the volume of pending foreclosures is also rising as the housing crisis continues to steam ahead without signs of stopping.

Although MBA reports also show a slowdown in the number of actual foreclosure filings, the positive news was little consolation. The MBA still projects more than 2 million foreclosure proceedings for the year-despite the positive impact of efforts such as foreclosure moratoriums.

Aggressive programs saved mortgage loans

Many experts interpret positive numbers with a grain of salt, pointing out that many more loans would have gone into foreclosure had it not been for aggressive programs, such as loan modifications, that have been instituted by lenders and government agencies.

While mortgage loans are under review for these kinds of programs, they remain reported as delinquencies that haven't turned into full-fledged foreclosures yet. And while fewer foreclosures were recorded, the volume of mortgage loans that are at least 90 stays into default has gone up dramatically.

Twenty states showed declines in the rate of foreclosure activity between the second and third quarters of this year. But at the same time, every state in the Union, with the exception of Alaska, saw a significant increase in the number of delinquent loans that are at least 90 days past due.

Sooner or later, many of these delinquencies will push homes to the auction block and will, in turn, add to the overall number of actual foreclosures.

Future sees more delinquencies

The real estate business doesn't operate in a vacuum, and the problems that began in the housing sector are now spread across the entire economy. That translates into higher rates of unemployment as job losses mount, and less spending as the availability of credit dwindles. With less money to spend, Americans are more inclined to avoid purchases-especially homes, which are the biggest ticket item for most people.

In some of the hardest hit foreclosure regions, like California, Florida, Michigan, and Nevada, a dismal job outlook is stoking the fires of foreclosure, just as those states are trying to recover from the real estate whiplash. Within the past 12 months, Florida racked up more than 150,000 job losses, California tallied at least 100,000, and Michigan surrendered in excess of 70,000. Across the U.S., job losses for the month of November topped half a million--the worst performance since the 1970s. Unemployment is now the highest it's been in 15 years, and the numbers keep growing.

Published on January 4, 2009