Nationally, 6.35 percent of all mortgages were considered delinquent in the first quarter, up from 5.82 percent in the fourth quarter of last year and 4.84 percent in the first three months of 2007, the association reported.

An additional 2.47 percent of mortgages were in the process of foreclosure in the latest quarter, up from 2.04 percent in the preceding three months and 1.28 percent in the first quarter of last year.

"The problems in California and Florida are extraordinary, and they are the main drivers of the national trend," said Jay Brinkmann, the association's vice president for research and economics.

California accounts for 13 percent of the United States' mortgages but is responsible for 21 percent of the homes that entered the foreclosure process in the latest period. Florida accounts for 8 percent of the United States' mortgages and 15 percent of foreclosures.

The number of foreclosure starts in the first quarter was the highest since 1979, as were the percentage of homes in foreclosure and the percentage in delinquency, the association said.

Although the mortgage crisis began in the sub-prime market, the number of troubled prime loans is on the rise. Of all loans that entered the foreclosure process, 19 percent were prime mortgages with fixed rates, 23 percent were prime loans with adjustable rates, 11 percent were fixed-rate sub-prime mortgages and 39 percent were adjustable sub-prime loans. FHA loans accounted for the remainder.

About 20 states saw declines in the number of foreclosures, including Michigan, Ohio and Indiana, Brinkmann said. But that improvement was more than offset by increasing troubles in California, Florida, Nevada and Arizona, which together accounted for 42 percent of all foreclosure starts in the first quarter.

California ranked below the national averages on delinquencies. A total of 16.9 percent of sub-prime loans in California were delinquent at the end of the first quarter, down from 18 percent in the fourth quarter.

The prime-loan delinquency rate for California was 3.52 percent, up modestly from 3.43 percent in the fourth quarter.

But Brinkmann said the problem in California is that delinquent loans have less of a chance of being cured than in other parts of the country because of the severity of the price declines here. In other words, delinquencies are more likely to turn into foreclosures in the Golden State.

The first-quarter data bear that out: The percentage of the state's prime loans in foreclosure soared to 1.49 percent as of March 31 from 1 percent three months earlier.

The national prime-loan foreclosure figures, for comparison: 1.22 percent as of March 31, up from 0.96 percent in the fourth quarter.

For sub-prime loans, the state's foreclosure percentage surged to 14.6 percent from 10.6 percent at the end of last year, compared with national rates of 10.74 percent and 8.65 percent.

The foreclosure data overall suggest "a flood of homes back on to the resale market," worsening the outlook for prices, Merrill Lynch & Co. economists warned in a note Thursday.

Shares of home builders are taking the hint. The Standard & Poor's index of 15 major builders' stocks was off about 2.3 percent at 3 p.m. to its lowest since March.

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