U.S. Homes Reach New Foreclosure Level, Share of Home Equity Drops
- Mar 07, 2008
Washington, D.C.–The number of American homes going into foreclosure hit the highest level on record in the fourth quarter of last year, according to the Federal Reserve.At the same time, homeowners’ share of home equity dropped to its lowest point since World War II, The Wall Street Journal said.Total American household wealth dropped $533 billion to $57.7 trillion–the first decline since 2002, influenced by housing-related asset values falling by $170 billion, the Federal Reserve said. The value of other financial assets, including stocks, declined by $254 billion.More than 2 percent of the nation’s 46 million mortgage loans were in the stages of foreclosure in the fourth quarter–the largest amount since the Mortgage Bankers Association began tracking foreclosures in 1972–and 0.83 percent of loans began the foreclosure process, according to the MBA.The home loan delinquency rate rose to 5.82 percent–nearly a quarter percentage point higher from the quarter before and the highest point since 1985.Although the recent increases involved large amounts of subprime and adjustable-rate mortgages, all loan types were affected.The home price index that the Office of Federal Housing Enterprise Oversight compiles is used by the Fed, but some criticize the index for underreporting the home value decline. The S&P/Case-Shiller home price index showed total household wealth fell by $1.4 trillion, according to The Wall Street Journal.