Delinquency Rates Expected to Keep Improving.

Washington -- Loan performance improved widely in the fourth quarter of 2004, though the Federal Housing Administration continues to suffer from unexpectedly high default rates. The number of FHA loans entering foreclosure hit an all time high late last year.

But for other loan types, both delinquencies and defaults have trended downward, and many economists expect that trend to continue.

Overall, 4.23% of home loans were at least 30 days past due at the end of 2004 and 1.12% were in the foreclosure process. The overall delinquency rate was 26 basis points lower than it had been in the fourth quarter of 2003 while the foreclosure rate was down 17 basis points year-over-year. Both the delinquency and foreclosure rates also were down on a quarter-to-quarter basis.

Moreover, the MBA's chief economist expects the performance of loans outstanding will continue to improve - at least for the next few quarters, before the huge pool of loans originated during the last couple of years starts to season into its peak delinquency years. In the meantime, an improving economy and steady job growth augur well for loan performance.

"Overall, mortgage delinquencies are lower than a year ago and lower than last quarter," Mr. Duncan said in a telephone press conference.

However, FHA loans were entering the foreclosure process at a pace of 1.05% during the fourth quarter. The overall delinquency rate for FHA loans declined just two basis points from one year earlier, ending ...