WASHINGTON - May 19, 2010 - The mortgage crisis is dragging on the economic recovery as more homeowners fall behind on their payments.

Analysts continue to voice their rosy expectations that improvement will come soon but even if it does, the number of homeowners in default or at risk of foreclosure will have a lingering effect on the broader economy.

More than 10% of homeowners with a mortgage had missed at least one payment in the January-March period, the Mortgage Bankers Association said Wednesday. That's a record high and up from 9.1% a year ago.

A big jump in the number of borrowers who have missed three months of mortgage payments drove the increase.

One encouraging sign is the number of homeowners just starting to show trouble is trending downward. As of March, nearly 3.5% of borrowers had missed one month of mortgage payments, down from about 3.8% a year earlier.

Around 4.3 million homeowners, or about 8% of all Amerikans with a mortgage, are at risk of losing their homes, the trade group's top economist estimates. They have either missed at least three months of payments or are in foreclosure.

Should loan modification programs fail to help, their homes will go up for sale either as a foreclosure or short sale - when the bank agrees to sell the property for less than the original mortgage amount.

Many analysts have been forecasting home prices will dip again as more of these homes go up for sale at deeply discounted prices.

"It's certainly a weight on the economy," said Mark Zandi, chief economist at Moody's Analytics, who predicts home prices will fall about 5% and hit the bottom next spring. "Nothing works all that well in the economy when house prices are falling."