<p>WASHINGTON – If the experts are to be believed, the recession is over. Still data released from a survey by the Mortgage Bankers Association of America indicate the bad news isn't over yet for mortgage delinquencies and foreclosures in the U.S. Nationwide, the survey found the delinquency rate for loans on one to four-unit residential properties was 4.65% in the fourth quarter 2001, a decline of 22 basis points compared with the third quarter of last year, but an increase of 15 basis points compared with the fourth quarter 2000. Delinquencies rose from a low of 3.9% at mid-year 2000, to a high of 5.8% before falling back to 5.6% in the fourth quarter. In addition, the percentage of loans in the process of foreclosure at the end of the quarter was 1.04%, an increase of 9 basis points compared with the third quarter, but a decline of 19 basis points compared with the fourth quarter 2000. Credit unions have fared better than other financials. Their focus on consumer and real estate lending and less reliance on commercial lending has given them a cushion against economic cycles compared to other lenders, said CUNA Chief Economist Bill Hampel. In December 2000, credit unions' 30-day delinquency rate was 1.02. In June 2001 it dropped slightly to 0.85, and then in December it went back up to 1.00. Net charge offs for CUs' mortgage portfolios were .03%. That trend should continue even as credit unions get increasingly involved with member business loans, "as long as they manage their pricing," said Hampel. But last year's mild recession was unique because consumer sector spending continued, despite the soft economy and rising unemployment rates. In this type of recession – what Hampel refers to as a "shallow bowl recession" the unemployment rate typically lags the economy's recovery. It may even continue to rise even as the recession slowly turns around. If that happens, said Hampel, credit unions should expect mortgage delinquencies to rise this year. "While mortgages are the single most important payment people make and always follow defaults on other loans, some people who were laid off last year won't find jobs soon enough to catch up with their mortgage loans," said Hampel. "The economy doesn't have a deep recession to kick back from," he added. "If the recovery is soft, it will take longer for the unemployment rate to come back." While it's possible the unemployment rate will level off quickly, Hampel predicts it will more likely continue to rise before it comes down. Overall, credit unions' delinquency rates rose slightly from .74% in December 2000, to .84% in December 2001. Hampel attributed the rise not so much to a deterioration in members' credit quality, but to a slowdown in CUs' loan growth. [email protected]</p>