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Mortgage Meltdown Only Half Over

While the year is coming to an end, there is unfortunately no end in sight yet for the foreclosure crisis.  MSNBC is reporting, new home foreclosures may have edged up again in the third quarter, but the number of borrowers falling behind on their payments has eased a bit.

New home foreclosures edged up, mostly affecting borrowers with subprime adjustable mortgages. Some 4.65 percent of those subprime loans entered the foreclosure pipeline – up from 3.62 percent in the second quarter, a 28 percent increase, according to the Mortgage Bankers Association.

Overall, the pace of new foreclosures for all loans edged up to 1.08 percent in the third quarter from 0.96 percent in the prior three month period. That’s down from 1.34 percent a year before.

The MBA said the rise in new home foreclosures was due in part to an increase in the number of loans that failed to get lender approval for a modification.

At the same time, the rate of borrowers who are three or more months behind on their payments is at about 3.5 percent of all mortgages – which is significantly lower than the peak high at 5 percent in late 2009. However, it’s still three and a half times the “normal” rate of about 1 percent that prevailed before the mortgage meltdown hit in late 2007.

“If you look at the pace of improvement I think we’re three to four years away from the typical pattern of seriously delinquent loans,” said Michael Fratantoni, MBA’s vice president of research and economics.

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