Delinquency Rate Edges Down.(mortgage banks)(Brief Article)

Despite a rise in foreclosures, the number of homeowners who were behind on their mortgage payments unexpectedly fell in the fourth quarter after climbing steadily for almost two years, according to a quarterly survey by the Mortgage Bankers Association of America.

The seasonally adjusted delinquency rate for loans on single-family properties was 4.65%, down 22 basis points from the third quarter of 2001. The drop in late payments is further evidence that an economic recovery may already be underway, but MBA economists said that short-term factors may have helped bring down late payments late last year. The overall delinquency rate had been trending upward since hitting a 28-year low point in the first quarter of 2000.

Mr. Duncan said the improvement in the fourth quarter was "somewhat surprising." He said he is "cautiously optimistic that delinquency rates may be stabilizing."

"We do believe the recession is over, but that doesn't necessarily portend a trend decline in mortgage delinquencies," he said.

In part, that's because the unemployment rate may not have peaked yet in this economic cycle, and rising unemployment could lead to more missed payments. Additionally, the expansion of high loan-to-value loan products and flexible underwriting, key to achieving the nation's record homeownership rate, may have created riskier loan portfolios.

The percentage of loans in the process of foreclosure in the fourth quarter of 2001 ...