Economy contingent on employment

Foreclosures threaten the jobless
One in 10 American households with a mortgage was at risk of foreclosure this summer as the government's efforts had little impact on the housing crisis.

WASHINGTON --- The jobs crisis is putting more Americans at risk of losing their homes.


One in 10 households has missed at least one mortgage payment, and more than 2 million homes have been repossessed since the recession began. Few expect the outlook to improve until companies start to hire steadily again and layoffs ease.

While there was some good news Thursday -- a modest decrease in the number of Americans filing for jobless benefits for the first time in a month -- the figure is still too high to bring down the unemployment rate.

So, the housing crisis goes on, even though the average rate on a 30-year mortgage fell again this week to an all-time low of 4.36 percent.

"Ultimately, the housing story, whether it is delinquencies, homes sales or housing starts, is an employment story," said Jay Brinkmann, the top economist for the Mortgage Bankers Association.

It's just one of the problems confronting Federal Reserve chief Ben Bernanke as he speaks today at a closely watched conference in Jackson Hole, Wyo. The Fed has mostly exhausted its ammo to give the economy a jolt.

Just under 10 percent of homeowners are delinquent on at least one mortgage payment as of June 30, according to a quarterly report on delinquencies released by Brinkmann's trade group. That's more than double the level before the recession.

The percentage of mortgage borrowers receiving foreclosure notices did fall slightly from the previous quarter, the first drop in four years. The percentage of loans receiving their first notice of foreclosure also dipped.

But many experts say the situation is getting worse. July was the worst month on record for new home sales and the worst in 15 years for sales of previously occupied homes.

The supply of unsold homes on the market keeps getting bigger. At the same time, the growing number of foreclosures keeps pushing down home prices and scaring potential buyers and sellers from the market.

More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Six million more will be lost to foreclosure over the next three years, by some estimates.

If that happens, home prices will probably sink further, and the economy will suffer. Builders will keep construction to a minimum, and Americans will be less willing to spend because of their lost home values.

A major problem is that many people have homes that are now worth less than they owe on their mortgages.

Approximately 11 million homeowners, or 23 percent of those with a mortgage, were "underwater" as of the end of June, real estate data provider CoreLogic reported Thursday.