Foreclosures climb to a record high

Delinquent payments on subprime loans in Massachusetts exceed the national average. (ASSOCIATED PRESS)

WASHINGTON - The number of Americans who may lose their homes to foreclosure reached a record in the second quarter as late payments by subprime borrowers surged to one of every seven loans.

Lenders began the process of seizing properties on 0.65 percent of US mortgages in the second quarter, an all-time high, the Mortgage Bankers Association said in a report yesterday. In the first quarter, that figure was 0.58 percent. In Massachusetts, the number of lenders beginning foreclosure was unchanged in the second quarter, at 0.59 percent, confirming other data that indicate foreclosure filings may be leveling off, albeit at a high rate.

But delinquent payments on subprime loans were much higher in Massachusetts than in the rest of the country: 16.97 percent of all subprime mortgages, up from 14.37 percent in the previous quarter. Nationwide, the percentage of subprime borrowers making late payments increased to 14.82 percent from 13.77 percent.

Foreclosures are rising as real estate prices tumble in a third of US real estate markets tracked by the National Association of Realtors and as state and federal lawmakers seek to stem delinquencies. Investors have abandoned the market for mortgage-backed securities, spurring 100 home loan companies to halt operations or seek buyers. The ensuing scarcity of credit is making things worse, said Doug Duncan, MBA's chief economist.

President Bush last week directed the Federal Housing Administration to guarantee loans for delinquent low- and middle-income borrowers. The Federal Reserve has cut the interest rate it charges banks by half a percentage point to 5.75 percent to help reduce the liquidity crisis.

Senate Banking Committee chairman Christopher Dodd, Connecticut Democrat, unveiled legislation Wednesday to strengthen protection for mortgage borrowers.