Doug Duncan, the association’s chief economist, said that foreclosures and late payments are likely to stay high or get worse in the coming quarters. The mortgage meltdown has hit financial companies with billions of dollars in losses from bad subprime mortgage investments. Some lenders have been forced out of businesses. The situation has elevated the odds of the country falling into a recession. It has roiled Wall Street and has offered lots of fodder for Democrats and Republicans to blame each other for the mess. Against this backdrop, the Federal Reserve next week is expected to slice a key interest rate for a third time this year to bolster the economy. Duncan said there were a host of factors to blame for the rise of foreclosures and late payments in the third quarter: broad-based declines in home values; the resetting of adjustable-rate mortgages to higher rates; the drying up of credit for subprime and “jumbo” mortgages, those exceeding $417,000; and economic weakness in some parts of the country. California and Florida – the two largest states in terms of outstanding mortgages – were key drivers in the increase in the national foreclosure rates, the association said. The two states together accounted for 33.7 percent of the subprime adjustable-rate loans that entered the foreclosure process in the third quarter. The two states combined also accounted for 42.4 percent of creditworthy “prime” adjustable-rate mortgages that started the foreclosure process.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! WASHINGTON – Home foreclosures shot up to an all-time high in the third quarter, fresh evidence of the problems afflicting distressed homeowners amid the housing meltdown. The Mortgage Bankers Association in its quarterly snapshot of the mortgage market released Thursday said that the percentage of all mortgages nationwide that started the foreclosure process jumped to a record high of 0.78 percent during the July-to-September period. That surpassed the previous high of 0.65 percent set in the prior quarter. More homeowners also fell behind on their monthly payments. The delinquency rate for all mortgages climbed to 5.59 percent in the third quarter. That was up from 5.12 percent in the second quarter and was the highest since 1986, the association said. Payments are considered delinquent if they are 30 or more days past due. AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREPettersson scores another winner, Canucks beat KingsHomeowners with spotty credit who have subprime adjustable-rate loans were especially hard hit. Foreclosures and late payments for these borrowers also reached all-time highs in the third quarter. The percentage of subprime adjustable-rate mortgages that entered the foreclosure process soared to a record of 4.72 percent in the third quarter. That was up from 3.84 percent in the second quarter. Late payments jumped to a record high of 18.81 in the third quarter, up from 16.95 percent in the second quarter. The association’s survey covers more than 45million home loans nationwide. Homeowners with spotty credit histories or low incomes who took out higher-risk subprime adjustable-rate mortgages have suffered the most distress as the housing market went from boom to bust. Initially, low interest rates that reset to much higher rates have clobbered these borrowers. Analysts estimate that nearly 2 million adjustable-rate subprime mortgages will reset to higher rates this year and next.