Foreclosures Hit Another All-Time High

How many more times must we hear this report?  Foreclosures hit another all-time high?

More home owners than ever are losing the battle to make their monthly mortgage payments.  Over 900,000 households are in the foreclosure process, up 71% from a year ago, according to a survey by the Mortgage Bankers Association.  That figure represents 2.04% of all mortgages, the highest rate in the report’s quarterly, 36-year history.  Additionally, the number of mortgage borrowers who were over 30 days late on a payment in the last three months of 2007 is at its highest rate since 1985.

According to a statement from the MBA’s Chief Economist, Doug Duncan, "Declining prices are clearly the driving factor behind foreclosures, but the reasons and magnitude of the declines differ from state to state."

Seems like an endless cycle doesn’t it?  The more prices fall the less likely it is that borrowers can use home equity to refinance into more affordable loans, which leads to more defaults.  And as foreclosures rise housing inventory increases, further depressing prices.

At the same time, these trends have led to a contraction in the construction industry, hurting overall U.S. economic activity and increasing the chances that the economy will fall into recession.