Economic News Shows People Losing Homes and Jobs in Record Numbers

More mortgages are now in foreclosure than ever before and more is expected as delinquency rates in the first quarter surged to 6.35 percent, the Mortgage Bankers Association said Thursday. To cap off the bad news, the U.S. Department of Labor reported Friday the largest surge in the unemployment rate since 1975.

The Mortgage Bankers Association said that nearly 0.99 percent of mortgages fell into foreclosure from January 1 to March 31 this year. The rate was up from the 0.83 percent of mortgages that went into foreclosure in the fourth quarter of 2007. At the end of the first quarter, 2.47 percent of all mortgages were at some point in the foreclosure process. The foreclosure start rate and total foreclosure rate are the highest since 1979.

Delinquencies also shot up in the quarter, according to the association, a signal that the foreclosure rate will continue to climb. In the first three months of 2008, 6.35 percent of all mortgages were 30 days or more past due, compared to a 5.82 percent rate in Q4 2007. Subprime mortgage holders were hit especially hard, with the delinquency rate on subprime adjustable-rate mortgages setting a new record at 22.07 percent from 20.02 percent in the fourth quarter.

As if to punctuate why so many Americans are having trouble paying their mortgages, the Labor Department announced Friday that the unemployment rate had jumped to 5.5 percent in May from 5 percent in April, the largest percentage increase since 1975. Economists had expected the rate to tick up to 5.1 percent.

Although the total unemployment rate spiked sharply, the nonfarm payrolls report was mostly inline with analysts’ expectations. Labor reported that 49,000 nonfarm jobs were lost in May; economists had expected a loss of around 50,000. In the first five months of 2008, the economy has lost a total of 324,000 jobs.

The hardest-hit sectors for job losses were construction, manufacturing, retail and temporary jobs. The health care sector added 34,000 jobs and government hired 17,000 additional workers.