June 5 (Bloomberg) -- The number of Americans in danger of losing their homes to foreclosure rose to the highest in at least three decades during the first quarter as borrowers who fell behind on payments were unable to sell their homes.

New foreclosures rose to a seasonally adjusted 0.99 percent of all U.S. home loans, up from 0.83 percent in the fourth quarter, the Mortgage Bankers Association said in a report today. The total inventory of homes in foreclosure increased to 2.47 percent and the delinquency rate, loans with one or more payments overdue, grew to 6.35 percent. All were the highest in a series that goes back to 1979, the Washington-based trade group said.

Falling home prices have stalled U.S. real estate sales, making it difficult for people who can't pay their mortgages to sell the properties. The increase in foreclosures was led by states with the biggest price declines over the past two years, said Jay Brinkmann, MBA's vice president of research and economics. California, Florida, Nevada and Arizona accounted for 89 percent of the gain in new foreclosures, he said.

``Price drops mean that even the best borrowers who run into trouble can't get out of their mortgage by selling, particularly in those states,'' Brinkmann said in an interview. ``There's a bleed-over to the rest of the U.S. because until those markets work through their problems, investors in mortgage-backed securities are going to be nervous and credit is going to be tight for everyone.''

Financial Losses

The collapse of the subprime market that began last year caused at least $380 billion of asset writedowns and credit losses at companies including Citigroup Inc. and Washington Mutual Inc. Fallout from bad mortgages has toppled at least half a dozen hedge funds and the chief executive officers at Citigroup Inc., Merrill Lynch & Co. and UBS AG.

Prime adjustable-rate mortgages in California, the largest U.S. state, accounted for 36 percent of all U.S. foreclosures started during the period. The state's subprime adjustable loans were 26 percent of the national total.

This week a spokesman for Ed McMahon, who appeared on television's ``The Tonight Show'' for three decades, said the 85- year-old entertainer may lose his Los Angeles estate to foreclosure after trying to sell it for two years for enough to cover his $4.8 million mortgage.

Subprime Delinquencies

The delinquency rate for subprime loans was 18.79 percent, up from 17.31 percent in the fourth quarter, according to the report. The gain was led by loans 30 to 59 days late, at 8.83 percent.

The delinquency rate for subprime adjustable-rate mortgages was 22.07 percent and the so-called seriously delinquent share, loans 90 days or more overdue, was 24.11 percent, the report said.

Twenty states had a decrease in new foreclosures, including Michigan, Ohio and Indiana, Brinkmann said.

``It may be that we will see foreclosure action and delinquencies begin to peak in parts of the country that did not evidence the big price increases,'' Brinkmann said. ``It will be the coastal areas that come back last.''

The Mortgage Bankers' report covers 45.2 million loans representing 80 percent of all outstanding U.S. first-lien home debt. The report doesn't specify the numbers of delinquent or defaulted loans, only a percentage.

Based on the report's data, about 3.44 million borrowers were at least 30 days late on their mortgage payments during the quarter and 537,000 homeowners received new foreclosure notices, making for a total foreclosure inventory of 1.34 million by the end of March.

To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.

Last Updated: June 5, 2008 13:09 EDT