Business Intelligence

The Rise In Mortgage Defaults

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Executive Summary

The mortgage market began suffering serious problems in mid-2005. According to data from the Mortgage Bankers Association, share of mortgage loans that were "seriously delinquent" (90 days or more past due or in the process of foreclosure) averaged 1.7 percent from 1979 to 2006, with a low of about 0.7 percent (in 1979) and high of about 2.4 percent (in 2002). But by second quarter of 2008, share of seriously delinquent mortgages had surged to 4.5 percent. These delinquencies foreshadowed a sharp rise in foreclosures: roughly 1.2 million foreclosures were started in first half of 2008, an increase of 79 percent from the 650,000 in the first half of 2007 (Federal Reserve estimates based on data from the Mortgage Bankers Association).

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