Delinquencies, Foreclosures Hit New Heights

At the end of August, some 6.6 percent of all mortgages were at least 30 days past due, up from 5.8 percent at the end of June and 4.51 percent a year earlier.
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That's according to an analysis prepared for The Wall Street Journal by Applied Analytics, a unit of Lender Processing Services Inc.

The largest percentage-point increase came on subprime loans, where the delinquency rate jumped more than 2.2 percentage points from June and July levels to 24.48 percent in August.

But other types of loans deteriorated rapidly, too. Delinquencies on option adjustable-rate mortgages, which let borrowers make minimum payments that may not even cover the interest due, jumped 1.17 percentage points, to 14.38 percent in August.

Delinquencies on Alt-A mortgages, a category between prime and subprime, also rose 1.17 percentage points, to 10.73 percent.

Doug Duncan, chief economist for Fannie Mae, said that as credit worries worsened, banks tightened their standards, making it tougher for borrowers with adjustable-rate mortgages to refinance and for homeowners in financial distress to sell their homes, which is causing some of them to fall behind.

Job losses also are taking a toll on borrowers, said Thomas Lawler, an independent housing economist. Previously, he said, housing troubles were largely independent of the overall economy.