WASHINGTON - Late payments and new foreclosures on adjustable-rate home mortgages made to people with spotty credit climbed to all-time highs in the first three months of the year.

The Mortgage Bankers Association, in its latest snapshot of the mortgage market, reported Thursday that the percentage of payments 30 or more days past due for 'subprime' adjustable-rate home mortgages jumped to 15.75 percent in the January-through-March quarter.

That was a sizable increase from the late 2006 delinquency rate of 14.44 percent and was the highest on record, the association's chief economist, Doug Duncan, said in an interview with The Associated Press.

People who have taken out subprime mortgages, especially adjustable-rate loans, have been clobbered. Rising interest rates and weak home prices have made it increasingly difficult for people to keep up with their monthly payments. Lenders in the subprime market have been hit hard; some have been forced out of business.

The percentage of subprime adjustable-rate mortgages that started the foreclosure process in the first quarter of this year climbed to 3.23 percent. That compared with 2.7 percent in the final quarter of 2006 and was the highest on record, Duncan said.

The first-quarter's increase in foreclosures mostly was driven by problems in Florida, California, Nevada and Arizona, he said.

In those four states, foreclosures are being 'heavily influenced by speculators who are walking away from properties now that home prices have started to fall in areas of those states and they face resets in the adjustable-rate mortgages they took out for these homes,' Duncan said.

Bernanke Predicts Further Increases

Federal Reserve Chairman Ben Bernanke, in a speech last week, predicted there will be further increases in delinquencies and foreclosures as interest rates on many subprime adjustable-rate loans go up as they reset.

Analysts estimate that nearly 2 million mortgages will reset to higher rates this year and next. Some subprime borrowers were lured by initially low 'teaser' rates offered during the five-year housing boom that ended in 2005. But those rates can spike upward after the first few years, causing payment shocks.

Still, Bernanke said it is unlikely that troubles in the subprime mortgage market will seriously spill over to the broader economy or the financial system.

Loose lending standards, including allowing borrowers to get mortgages with little documentation, contributed to problems in the subprime market, Bernanke said. Congress is considering action.

Bernanke, meanwhile, has said the Fed will consider tougher rules to curb abusive practices and improve disclosure.

'In doing so, however, we must walk a fine line,' said Fed Governor Randall Kroszner, who presided over a public hearing Thursday on the matter. 'We must determine how we can help to weed out abuses while also preserving incentives for responsible lenders,' he said.

For all mortgages, the delinquency rate dipped to 4.84 percent in the first quarter, an improvement from the fourth quarter's rate of 4.95 percent, which had marked a 3 1/2 -year high.

But the number of all mortgages starting the foreclosure process in the first quarter rose to a record high of 0.58 percent. That surpassed the previous high of 0.54 percent in the final quarter of 2006.

The Mortgage Bankers Association's survey covers nearly 44 million loans nationwide.

'It's Not Too Late'

Sen. Charles Schumer, D-N.Y., said the survey shows the need for his legislation that would help homeowners avoid foreclosures by boosting funding to community groups that provide financial counseling. 'It is not too late to act to help families before they lose their homes,' he said. 'Left alone, a wave of new foreclosures threatens entire communities across the country.'

Wall Street was jarred when the association's report in March showed surging delinquencies and new foreclosures in the final quarter of last year. The Dow Jones industrials tumbled that day nearly 243 points.

The subprime meltdown began in February when New Century Financial Corp. and HSBC Holdings reported more borrowers missing payments. The spike in bad loans scared banks and investors away from risky debt, drying up much of the industry's financing. More than 30 subprime lenders, including New Century, have gone bankrupt this year.

With the hope that subprime problems will be worked through and won't infect the overall mortgage market, Duncan said, 'we're just urging people to take a deep breath and look at the big picture.'