Home foreclosures reach record high

NEW YORK (Reuters) - Home foreclosures and the rate of homes entering foreclosure rose to record highs in the second quarter, the Mortgage Bankers Association said on Friday.

"The national foreclosure numbers continue to be driven by the hardest-hit states continuing to get much worse," Jay Brinkmann, the association's chief economist and senior vice president for research and economics, said in a news release.

The increases in foreclosures in California and Florida overwhelmed improvements in states such as Texas, Massachusetts and Maryland, he said.

"It is unsurprising that mortgage delinquencies picked up further in the second quarter," John Ryding, chief economist, and Conrad DeQuadros, senior economist, at RDQ Economics in New York, said in commentary.

"However, the increase in delinquencies and foreclosures up to this point is most likely predominantly the product of poor underwriting standards. Going forward, we have to overlay the weak economy and labor market picture as this more traditional driver of delinquencies will probably become more of a factor," they said.

For the quarter, a majority of the states saw relatively little change one way or the other, with California and Florida alone accounting for 39 percent of all of the foreclosures started in the second quarter and 73 percent of the increase in foreclosures between the first and second quarters, the MBA's Brinkmann said.

The seasonally adjusted foreclosure starts rate, the percentage of loans that entered the foreclosure process during the April-June quarter, was 1.19 percent, up from 0.99 percent in the first three months of 2008 and 0.65 percent in the second quarter of 2007.

The percentage of loans in the foreclosure process at the end of the second quarter rose to 2.75 percent from 2.47 percent in the first quarter and 1.40 percent in the second quarter of 2007.

The U.S. mortgage delinquency rate of 6.41 percent was the highest since at least 1979, which was when the trade group began its current method of measuring failing home loans.

The rate rose from 6.35 percent in the first quarter and 5.12 percent in the second quarter of 2007.

The increase in the overall delinquency rate was driven by increases in the number of loans 90 or more days past due, primarily in California and Florida. The 30-day delinquency percentage remains below levels seen as recently as 2002, the MBA said in its National Delinquency Survey.

The second-quarter increase in overall seasonally adjusted delinquencies was comprised primarily of increases in delinquencies for prime loans, the MBA said.

The delinquency rate for prime loans in the second quarter was 3.93 percent, up from 3.71 percent in the first quarter and 2.73 percent in the second quarter of 2007.

The delinquency rate for subprime loans, however, fell in the second quarter to 18.67 percent from 18.79 in the first quarter. The delinquency rate increased from 14.82 percent in the second quarter of 2007.

By loan type, the seasonally adjusted foreclosure starts rate for prime loans in the second quarter was 0.67 percent, up from 0.54 percent in the first quarter and 0.27 percent in the second quarter of 2007.

The seasonally adjusted foreclosure starts rate for subprime loans in the second quarter was 4.70 percent, up from 4.06 percent in the first quarter and 2.72 percent in the second quarter of 2007.

(Editing by James Dalgleish)