Record 10% of U.S. homeowners in arrears or foreclosure

With the mortgage business already ripped apart by easy-money lending during the housing boom, the recession has added a more traditional creator of bad loans: losing a job.

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Combined with a 40% decline in California's median home price, the faltering economy is resulting in the highest rate on record of troubled home loans actually going into foreclosure, said Jay Brinkmann, chief economist for the Mortgage Bankers Assn.

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At first glance, California's troubles seem little different from those anywhere else, because just under 7% of borrowers in both California and the nation are behind on payments. But Brinkmann said a clearer picture emerges when you compare the number of newly delinquent loans in one quarter with the number of loans entering the foreclosure process the following quarter.

That foreclosure "roll rate" was about 10% to 12% nationally in the 1990s and ran from 12% to 15% for most of this decade, Brinkmann said. The percentage is now 30% nationally but has reached 79% in California and 65% in Florida, he said.

"This is nothing like anything we've ever seen before," Brinkmann said. "We were shocked when we saw the California roll rates."