A record percentage of U.S. mortgages entered foreclosure in the first quarter, and the jump in foreclosure starts compared with the fourth quarter was the biggest leap ever recorded in the Mortgage Bankers Association's survey.

According to the MBA's quarterly National Delinquency Survey, 1.37% of mortgages entered the foreclosure process in the first quarter, up from 1.08% in the fourth quarter.

Total foreclosure inventory was also up, with 3.85% of all mortgages somewhere in the foreclosure process at the end of the first quarter, compared with 3.3% in the fourth quarter -- also a record jump. The delinquency rate, which includes loans that are at least one payment past due but not those in foreclosure, was a seasonally adjusted 9.12%, up from 7.88% in the fourth quarter.

The Washington-based MBA survey covers 45 million mortgages, representing between 80% and 85% of all first-lien residential mortgages outstanding in the United States.

"The increase in the foreclosure number is sobering but not unexpected. The rate of foreclosure starts remained essentially flat for the last three quarters of 2008 and we suspected that the numbers were artificially low due to various state and local moratoria, the Fannie Mae and Freddie Mac halt on foreclosures, and various company-level moratoria," said Jay Brinkmann, MBA's chief economist.

"Now that the guidelines of the administration's loan modification programs are known, combined with the large number of vacant homes with past due mortgages, the pace of foreclosures has stepped up considerably," he added in a news release.

Until the country's employment situation improves, it's not likely that the level of mortgage defaults will begin to fall, Brinkmann added.

"MBA's forecast, a view now shared by the Federal Reserve and others, is that the unemployment rate will not hit its peak until mid-2010. Since changes in mortgage performance lag changes in the level of employment, it is unlikely we will see much of an improvement until after that," he said.

Some things change, some stay the same

While subprime, option ARM and Alt-A loans were a focus of the foreclosure problem initially, the foreclosure rate on prime fixed-rate loans has doubled in the last year.

"For the first time since the rapid growth of subprime lending, prime fixed-rate loans now represent the largest share of new foreclosures," Brinkmann said - evidence, he added, of the impact that the recession and drops in employment is having on the foreclosure numbers.

California, Florida, Arizona and Nevada still are driving up national numbers, accounting for 46% of the foreclosure starts in the country for the first quarter.

Foreclosure actions were started on 3.4% of mortgages in Nevada, 2.8% of the mortgages in Florida, 2.5% of the mortgages in Arizona and 2.2% of the loans in California. By comparison, foreclosure actions were started on 1.5% of mortgages in Michigan and Illinois, and 1.3% of mortgages in Indiana and Ohio.

At the end of the first quarter, 10.6% of mortgages in Florida were somewhere in the foreclosure process, followed by 7.8% of mortgages in Nevada, 5.6% of mortgages in Arizona and 5.2% of mortgages in California, according to MBA statistics.