Jay Brinkmann, the mortgage group's chief economist, says the delinquencies would keep rising till unemployment rate reduces next year.
The beginning of the year saw 14.41 percent of loans in foreclosure, which means that out of 10 loans, 1 was definitely delinquent.
Foreclosures rates likely to remain high
Prime loans, the main source of mortgages, account for 33 percent of new foreclosures. Last year’s figures of 21 percent show the massive jump that delinquencies made this year.
"The outlook is that delinquency rates and foreclosure rates will continue to worsen before they improve," said Brinkmann.
Many economists, however, hold the view that even if unemployment reduces foreclosure rates will most likely be high.
John Taylor, chief executive of the National Community Reinvestment Coalition says, "It's still disappointing nonetheless. Everyone would like to see a slowdown in this."
A disappointing situation
The foreclosure rates in California and Florida—43.4 percent, have been the highest till now.
In Virginia, the foreclosure rates have increased from last year’s 7 percent to 9.9 percent. Maryland records a 13.9 percent delinquency, up from last year's 9.2 percent.
Phil Orlando, chief equity market strategist at Federated Investors said, "This is an easy opportunity for some of the weak hands to take some profits. I am characterizing what is going on here as a speed bump. This turn in the economy is real. There is just a little bit of chop to the numbers."
Buyers overloaded with debt in the current market situation have a lot to say. Jason Gorowitz, a 34-year-old attorney took two loans to buy a two-bedroom Sherman Oaks condominium in 2006. After paying one loan, he lost his job. He tried to persuade his lender, JPMorgan Chase & Co., to lower the payment till he got a new job, but the bank did not modify the terms.
"If something isn't done soon, I'm going to be in default," Gorowitz said.
The fate of the buyer clearly reflects that despite the recent signs of recovery, the foreclosures continue to increase.
The Dow Jones Industrial average came down by 0.9 percent, while Standard and Poor’s decreased by 1.3 percent Thursday.
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