By THOMAS CONTENT

One of every nine homeowners in Wisconsin was behind on mortgage payments or in foreclosure at the end of September -- a record level that industry observers said Thursday is likely to rise.

The state continues to fare better than the nation, however, as delinquencies or foreclosures now account for one of every seven loans across the country, the Mortgage Bankers Association said in its quarterly report.

The report found more than 11% of Wisconsin loans and more than 14% of national loans were either in foreclosure or delinquent at the end of the quarter, with both rates up sharply from the same time last year.

It was a record-high figure for the ninth straight quarter.

The data suggest the housing market and the broader recovery will remain under pressure from the surge in home-loan defaults, especially as unemployment keeps rising. Lost jobs are the main reason homeowners are falling behind on their mortgages.

After three years of plunging prices, the housing market started to rebound this summer. That lifted hopes for the overall economy. But analysts say there are too many foreclosed homes that have yet to be dumped on the market, and they expect further price declines.

The outlook is grim, as job losses and adjustable-rate mortgages resetting at higher rates pack a one-two punch for homeowners getting behind on mortgage payments.

"The outlook is that delinquency rates and foreclosure rates will continue to worsen before they improve," said Jay Brinkmann, chief economist at the Mortgage Bankers Association. "First, it is unlikely the employment picture will get better until sometime next year, and even then jobs will increase at a very slow pace.

"Perhaps more importantly, there is no reason to expect that, when the economy begins to add more jobs, those jobs will be in areas with the biggest excess housing inventory and the highest delinquency rates."

Foreclosure rates are rising in Wisconsin, which ranks 17th in the nation in foreclosures started during the third quarter. By contrast, Wisconsin ranked 36th in the nation in delinquencies.

"What happened is Wisconsin was lagging the nation as a whole, and now it's starting to pick up and really accelerate," said bankruptcy and foreclosure lawyer David Liebowitz of Lakelaw in Kenosha.

Subprime loans a concern

An increase in foreclosures had been forecast earlier this year by Milwaukee Mayor Tom Barrett, even after the county posted a 77% jump in foreclosures in 2008 compared with 2007.