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 July 29, 2010 Thursday
FIRST EDITION

SECTION: MONEY; Pg. 6A

LENGTH: 364 words

BYLINE: Stephanie Armour

BODY: 

A record number of borrowers once judged the most creditworthy are heading into foreclosure as the job market leaves more homeowners unable to keep up with mortgage payments.

Foreclosures among borrowers with prime conforming loans have shot up 425% since January 2008, according to Lender Processing Services, which compiles mortgage data. Conforming loans are those eligible for purchase by Fannie Mae and Freddie Mac, the federal agencies that buy mortgages from lenders.

Jumbo prime loans not eligible for purchase by Fannie or Freddie have done even worse -- foreclosures on those have increased nearly 600%.

Jumbo loans are typically mortgages worth more than $729,750.

"Jobs is a major impact. It's a huge factor," says Ken Shuman, a spokesman with Trulia.com, a real estate search engine. "A lot of homeowners on the higher end are also savvy investors. They're seeing their home has lost 30% of their value, we're seeing a lot of strategic defaults."

A strategic default occurs when a borrower stops paying a mortgage they can afford to pay, often because the house's value has fallen below the loan balance.

While the U.S. may be seeing signs of a peak in foreclosures in some of the hardest-hit markets, foreclosure activity continued to rise in many of the nation's metropolitan areas in the first half of the year.

RealtyTrac reports today that 154 of 206 U.S. metropolitan areas with populations of 200,000 or more posted year-over-year increases in foreclosure filings, covering properties in various stages of the foreclosure process.

The top 20 metro areas with the highest foreclosure rates were in four states -- Florida, California, Nevada and Arizona, according to the report.

Other RealtyTrac findings:

*94,466 properties received a foreclosure filing in the Miami-Fort Lauderdale-Pompano Beach metro area during the first half of 2010, more than any other metro area.

*The metro area with the second-highest total filings was Los Angeles-Long Beach-Santa Ana, which had 93,263.

*Las Vegas continued to post the nation's highest metro foreclosure rate in the first half. One in 15 of its housing units received a foreclosure filing -- more than five times the U.S. average.

LOAD-DATE: July 29, 2010