House 'flipping' flips to foreclosure

WASHINGTON, June 15 (UPI) -- Housing speculators who bought then walked in the U.S. Sun Belt pushed the foreclosure rate on prime mortgage loans to a record high, an industry group said.

Figures released by the Mortgage Bankers Association showed foreclosures in the first quarter of 2007 rose in nearly every category, particularly in Rust Belt states experiencing manufacturing recessions and Sun Belt states where investors hope to make a quick buck by flipping a house, The Washington Times reported Friday.

"The foreclosures in Florida, Nevada, California and Arizona are heavily influenced by speculators who are walking away from properties now that home prices have started to fall," Doug Duncan, chief economist of the Mortgage Bankers Association, told the Times.

As creeping rates soften the housing market, investors' get-rich-quick dreams have been replaced by nightmares of losing money as prices fall. Instead of risking the loses, some investors walked away from their loans, turning their properties over to the banks for auction, the newspaper said.

The share of all mortgages entering foreclosure rose to 0.58 percent in the first quarter from 0.54 percent at the end of 2006, MBA reported Thursday, led by a jump in subprime loans entering foreclosure to 2.43 percent from 2 percent.