No Foreclosure Relief in Sight.

Washington -- Few experts were expecting much relief from the rising tide of loan defaults in the fourth quarter of last year, but some were surprised by the extent of the continued credit deterioration.

When the foreclosure inventory is added to the delinquency rate, nearly 8% of all homeowners with a mortgage were not making payments in the fourth quarter. And there is little evidence that the default wave has peaked.

The overall delinquency rate in the fourth quarter of 2007, at 5.82% not including the foreclosure inventory, was 87 basis points higher than it had been one year earlier.

The foreclosure inventory, with 2.04% of all loans at some stage of the foreclosure process, stood at a record level. And there's little evidence that relief is in sight. And the percentage of loans entering the foreclosure process also reached a record high, at 0.83%. That was up 29 basis points from the foreclosure start rate one year earlier.

"We don't expect to see the peak in delinquencies or foreclosures until mid-to-late 2008," the MBA's chief economist, Doug Duncan, told reporters last month. (Mr. Duncan recently said he is leaving the MBA to take the top economic post at Fannie Mae).

Once again, the MBA said that adjustable-rate mortgages - especially those to subprime borrowers - drove the increases in overdue payments and foreclosures. And two big states that have seen home values slide, California and Florida, continue to drive the national numbers. Twenty-one percent of the nation's outstanding home loans are from California or Florida, and those states have an even greater market share by dollar volume.

Mr. Duncan said that falling home prices are "clearly the driving factor" behind the bleak foreclosure picture, though he said the magnitude and underlying reasons for rising defaults vary from state to state.