1 in 10 Americans in arrears or foreclosure

Real estate records are set in 3d quarter as prices tumble, trapping homeowners

One in 10 American homeowners fell behind on mortgage payments or were in foreclosure during the third quarter as the world's largest economy shed jobs and real estate prices tumbled.

Mortgages 30 days or more overdue rose to a seasonally adjusted 6.99 percent, while loans already in foreclosure rose to 2.97 percent, the Mortgage Bankers Association said yesterday. Both were record highs in a survey that goes back 29 years.

The US economy shed 1.91 million jobs in the first 11 months of the year, and people who couldn't pay their mortgages had a harder time selling their property because of falling home prices.

"Until we see a turnaround in the job situation, we're not going to see these numbers improve," said Jay Brinkmann, chief economist of the Washington-based bankers group.

New foreclosures fell to 1.07 percent from 1.08 percent in the second quarter as some states enacted laws to temporarily stop home repossessions and lenders increased efforts to modify the terms of loans, Brinkmann said. That also led to an increase in loans with payments 90 days or more overdue.

"We're seeing more loans build up in the 90-days bucket as lenders work to modify loans and states put in place programs that delay foreclosures," Brinkmann said.

US home sales and prices began to tumble in 2006 after a five-year boom, dragging the economy into a recession that began in December 2007, the National Bureau of Economic Research said this week.