Slowdown Starting To Hit Subprime Loans and Commercial Real Estate.

At the end of last year, one in six subprime mortgage borrowers was behind on their payments, according to the Mortgage Information Corporation, San Francisco.

And that could be just the tip of the iceberg, as evidence continues to grow that credit quality has deteriorated in both the residential and commercial real estate sectors. Most recently, the Federal Reserve System, with its August gauge of current economic conditions, warned that real estate markets and commercial rents are softening.

On the residential side, not surprisingly, it's the subprime credit quality sector that is taking the first shots.

According to the MIC, serious delinquencies on subprime mortgage loans were 21% higher at the end of last year than they were a year earlier. In December of 2000, 6.1% of the subprime mortgage loans in the MIC's database were at least 90 days late or in foreclosure, up from 5.06% a year earlier.

And that doesn't paint the full picture. The MIC found that 15.5% of the loans in its 1.4 million loan subprime database were 30 days or more late, meaning more than one in six subprime borrowers was behind in their mortgage payments.

In addition, the MIC (www.loanperformance.com) said that loans originated last year are showing more early delinquency problems than other recent vintages, on both the subprime and prime sides of the mortgage business.

Delinquencies on "prime" credit quality loans remain in check, but there are issues that raise concern.