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Foreclosures Continue to Threaten Americans in Q2

"...the housing market and the economy will remain weak for a few years."

According to a quarterly survey that covers nearly 88 percent of primary residential mortgages (totaling nearly 44 million loans), more and more Americans are at risk of foreclosure, reflecting the weakened state of the U.S. economy.

"Mortgage delinquencies are no longer improving and are now showing some signs of worsening," Jay Brinkmann, chief economist of the Mortgage Bankers Association (MBA) said in a recent AP report.

"While overall mortgage delinquencies increased only slightly between the first and second quarters of this year, it is clear that the downward trend we saw through most of 2010 has stopped," he said.

The MBA said earlier this week that 8.44 percent of homeowners missed at least one mortgage payment in the April-June quarter. That figure, adjusted for seasonal factors, rose 0.12 percentage point from the January-March period.

In a normal market, the percentage of delinquent borrowers is about 1.1 percent, according to the trade group. That being said, it is cause for concern that the figure is currently 8 times what it should be.

However, there is some "good news": delinquent mortgages have fallen from more than 10 percent of residential mortgages a year ago. But there is a catch: the decline is due in part to delays in foreclosure filings that are backlogged in several state courts, including Florida, New Jersey, Illinois and New York.

So in reality, it is not improving economic situations that caused the dip from 10 to 8.44 percent. It is inefficient bureaucracies.

Marketplace analysts are also warning that state and federal investigations into faulty foreclosure paperwork will likely lead to increased foreclosures later this year.

So it was not really good news then, was it?

Analysts say the increase is especially worrisome because it is due mainly to high unemployment, which naturally leads to missed payments which, in turn, leads to foreclosures.

"The current processing delays mean this will not happen quickly, underlining our view that both the housing market and the economy will remain weak for a few years," said Paul Dales, senior U.S. economist at Capital Economics.

But at least for some, there is "nothing wrong with out country right now."

(The Associated Press contributed to this story).

One last thing…
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