Warning Signs Crop Up.

While a "freshening effect" from refinancing activity has helped bring delinquency rates down for prime and subprime loans, a mortgage data firm here sees early warning signs of trouble for some markets.

The good news is that LoanPerformance has seen delinquency rates have trend downward since March.

Serious delinquencies on subprime loans- those 90 days or more past due - have declined steadily in recent months. In May, the serious delinquency rate was 7.61%, down from a recent peak of 8.38% in January of 2002.

The five states with the worst performing subprime mortgage loans for recent originations were Utah, South Carolina, Mississippi, Ohio and Oklahoma, according to LoanPerformance's database.

The San Francisco-based research company is not the only source of information that suggests the delinquency rate on B&C loans is falling. Recently, the Mortgage Bankers Association of America, which has started tracking delinquency rates among predominantly subprime lenders, reported that 12.4% of subprime loans were at least 30 days late in the first quarter, down from a delinquency rate of 14% a year earlier. However, the MBA cautions that it is still building its database, and changes in the composition of firms participating in the survey may affect the numbers.

The serious delinquency rate on prime loans has been declining since December of last year, the company said.

Sheila Meagher, vice president of market research at LoanPerformance, said that mortgage delinquencies have benefited from a "freshening effect" as refinancing brings down the average age of loans ...