State foreclosure rate up from '06

WASHINGTON — Home foreclosures shot up to an all-time high in the third quarter, fresh evidence of the problems afflicting distressed homeowners amid the housing meltdown.

The Mortgage Bankers Association in its quarterly snapshot of the mortgage market released Thursday said that the percentage of all mortgages nationwide that started the foreclosure process jumped to a record high of 0.78 percent during the July-to-September period. That surpassed the previous high of 0.65 percent set in the prior quarter.

Homeowners in Washington state appear to be in better condition, according to RealtyTrac, a foreclosure-listing service, which broke down third-quarter figures last week for Washington state, King, Pierce and Snohomish counties.

In the state, the household-foreclosure-filing rate is less than one quarter of one percent (0.23 percent), which is half the national rate, at one foreclosure filing for every 439 households in the third quarter. That, however, is a 42 percent increase over the same period last year.

In the Puget Sound region, Pierce County continues to be in the worst shape at 0.45 percent, with one foreclosure filing per 221 households, a 62 percent increase over a year ago.

In King County, one in every 494 households is in foreclosure (0.2 percent), a 25 percent increase over a year ago.

In Snohomish County, one in every 371 households is in foreclosure (0.27 percent), a 36 percent increase over a year ago.

Fewer households in King County entered the foreclosure process in October compared with the previous month and to October a year ago. There was no change in Snohomish County during the same two time frames,

But in Pierce County, the number of households in foreclosure increased 9 percent in October from September and 36 percent compared with a year ago in October.

Nationally, more homeowners also fell behind on their monthly payments.

The delinquency rate for all mortgages climbed to 5.59 percent in the third quarter. That was up from 5.12 percent in the second quarter and was the highest since 1986, the association said. Payments are considered delinquent if they are 30 or more days past due.

Homeowners with spotty credit who have subprime adjustable-rate loans were especially hard hit. Foreclosures and late payments for these borrowers also reached all-time highs in the third quarter.

The percentage of subprime adjustable-rate mortgages that entered the foreclosure process soared to a record of 4.72 percent in the third quarter. That was up from 3.84 percent in the second quarter. Late payments jumped to a record high of 18.81 percent in the third quarter, up from 16.95 percent in the second quarter.

The association's survey covers more than 45 million home loans nationwide.

Doug Duncan, the association's chief economist, said in an interview with The Associated Press that foreclosures and late payments are likely to stay high or get worse in the coming quarters.

Duncan said there were a host of factors to blame for the rise of foreclosures and late payments in the third quarter: broad-based declines in home values; the resetting of adjustable-rate mortgages to higher rates; the drying up of credit for subprime and "jumbo" mortgages, those exceeding $417,000; and economic weakness in some parts of the country.

California and Florida — the two largest states in terms of outstanding mortgages — were key drivers in the increase in the national foreclosure rates, the association said. The two states together accounted for 33.7 percent of the subprime adjustable-rate loans that entered the foreclosure process in the third quarter. The two states combined also accounted for 42.4 percent of creditworthy "prime" adjustable-rate mortgages that started the foreclosure process.