Virginia Mortgage Defaults Climb and Climb

More people in the state are having trouble paying their Virginia mortgage loans.

Loans past due and in foreclosure are rising here and nationwide, according to a survey of the mortgage market released yesterday by the Mortgage Bankers Association.

Virginia housing market foreclosures nearly doubled to 0.44 percent of all loans - or 6,067 - in the first three months of the year from 0.24 percent in the same period a year ago.

Virginia did better than the nation, which saw the percentage of all loans in foreclosure climb to 1.28 percent - or 561,857 - from 0.98 a year ago. The 10-year average for the U.S. is 1.19 percent.

Hardest hit were those with poor credit histories who took out adjustable-rate mortgages, according to the survey. As mortgages reset at higher interest rates, people were unable to make the higher payments.

Nationally, the percentage of subprime ARMs at least 30 days late was 13.87 percent in the first three months of the year, up from 10.58 percent in the same period a year ago. Subprime mortgages serve people with poor credit.

Virginia saw a similar rise with 12.93 percent of all subprime ARMS past due, up from 8.6 percent a year ago.

“I would expect Virginia to perform better than the nation because home prices here, except for in Northern Virginia, did not rise as rapidly,” said Christine Chmura, president of Chmura Economics & Analytics in Richmond.

“Because houses are more affordable in Virginia, especially the Richmond area, fewer homeowners had to stretch their incomes and take out riskier loans to afford houses.”

According to the survey, more foreclosures were initiated nationally in the first quarter than at any other time. Virginia also recorded a higher number of foreclosure starts than in the same quarter a year ago.

“We’re likely to see modest increases in delinquencies over the next few quarters before the slowdown dissipates,” said Doug Duncan, chief economist for the Mortgage Bankers Association.

Foreclosures, which lag behind delinquencies, may not peak until early 2008, he said.

“The housing recovery will be late 2007. Significant inventories will have to be worked off in certain sections of the country.”

The housing market in general is healthy, Duncan said. The share of U.S. homeowners who have paid off their mortgage loans is 35 percent.

Despite troubles in the subprime ARM market, eight in 10 of those mortgage holders are paying on time, Duncan said. So things coule be worse.

SOURCE: The Richmond Times-Dispatch