Subprime mortgage delinquency was most prevalent in Massachusetts in the final quarter last year, according to the Mortgage Bankers Association.
More than 24 percent of all Massachusetts homeowners with adjustable-rate subprime home loans were in default by at least three months in the final quarter of 2009 and another 13 percent of homeowners with fixed-rate subprime home loans were in default by at least one month.
All in all, more than 9.7 percent of all Massachusetts borrowers were in default by at least one month on their mortgage loans in the final quarter, the highest rate reached by any U.S. state since the late 1970s when the MBA started tracking default rates.
Additionally, a record high 8.3 percent of all homeowners with mortgage loans in Massachusetts were in foreclosure or in serious default ? more than 90 days delinquent.
According to MBA analyst Mike Fratantoni, the major reasons for default were unemployment and high levels of credit card debts. He added that a big portion of the defaulting subprime mortgage borrowers have not moved on to foreclosure because of efforts of the state to help residents save their homes under the Home Affordable Modification Program.
He also said that a number of banks have been slowing their processing of foreclosures to be able to list distressed properties in their books as delinquent assets and not as repossessed properties.
Nationwide, 4.6 percent of all homeowners with mortgages were delinquent by at least three months in the final quarter of 2009. The good news is the decline in percentage of borrowers in default by only one month.
Another good news is that the national default rate dropped compared to the previous quarter, a time when people are buying gifts and paying arrears in heating costs.
Considering all types of delinquencies, Mississippi ranked the highest, with a default rate of 14.9 percent, and Florida ranked the highest in foreclosure activity with its 13.4 percent rate.
Michigan was fourth in number of delinquencies and in number of new defaults in the final quarter. Out of 1.38 million home loans in Michigan, almost 13 percent were in default by at least one month while 4.6 percent were already in foreclosure.
Nationally, fewer borrowers went into default in the October-December quarter of 2009.
According to Jay Brinkmann, the chief economist of the MBA, the drop in the nationwide default trade is showing signs that the country is finally recovering from foreclosures caused by subprime mortgage loans.
