U.S. Mortgage Foreclosures Rise as Owners 'Give Up' (Kathleen M. Howley)

Created by : Francis Goodwin View profile

March 6 (Bloomberg) -- U.S. mortgage foreclosures rose to an all-time high at the end of 2007 as borrowers with adjustable-rate loans walked away from properties before their payments increased, the Mortgage Bankers Association said today.

New foreclosures jumped to 0.83 percent of all home loans in the fourth quarter from 0.54 percent a year earlier. Late payments rose to a 23-year high, the organization said in a report today.

``We're seeing people give up even before they get to the reset because they couldn't afford the home in the first place,'' said Jay Brinkmann, vice president of research and economics for the Washington-based trade group.

The worst housing slump in a quarter century is sending foreclosure rates higher and home prices tumbling as an oversupply of properties reduces demand. The Federal Reserve has slashed its benchmark rate twice this year in an attempt to avert the first recession since 2001 and financial companies have had at least $181 billion in asset writedowns and credit losses since the start of 2007, according to Bloomberg data.

``It comes down to an overstretching of buyers to get into homes they couldn't afford and an overextending of credit by lenders who were more willing to take risk,'' Brinkmann said.