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WASHINGTON – To no one’s surprise at the Mortgage Bankers Association, residential mortgage delinquencies increased at the end of the fourth quarter 2005. According to the MBA’s fourth quarter 2005 National Delinquency Survey, the delinquency rate for mortgage loans on one-to-four unit residential properties was 4.70% at that time, up from 4.38% in the fourth quarter 2004 and 4.44% in the third quarter 2005. The survey covered over 41.2 million loans including 31.1 million prime loans, 5.5 million subprime and 4.6 million government loans. Foreclosure rates also increased. The percentage of loans in the foreclosure process was 0.99% at the end of the fourth quarter 2005, down 16 basis points from the previous year and up two basis points from the third quarter 2005. Foreclosure rates were highest in Ohio, Indiana and Michigan – Ohio in fact, had the highest number of loans in foreclosure for the second consecutive year. MBA Chief Economist and Senior Vice President Doug Duncan said the association was expecting a rise in the delinquency rate, and he attributed the upswing to several factors – “the seasoning of the loan portfolio, the increased shares of the portfolio that are ARMs and subprime mortgages, as well as the elevated level of energy prices and rising interest rates.” Not surprising because of lingering effects of Hurricane Katrina, about one in five mortgages in Louisiana and Mississippi was delinquent – the MBA said almost 76,000 homeowners in the two states were “seriously delinquent” meaning 90 days or more past due or in the process of foreclosure. In Louisiana, 16.1% of prime loans were delinquent, 33.9% subprime loans, and 31.8% FHA loans. In Mississippi, 11.8% prime loans were delinquent, 31.1% subprime, and 24.9% FHA loans. In fact, the MBA offered that once the hurricane effects were eliminated from the fourth quarter statistics, delinquency rates for all loan types were much lower. According to MBA’s Jay Brinkman, vice president of research and economics, “a sizable portion of these delinquencies are due to borrowers availing themselves of the forbearance programs many lenders have had in place since September. These programs postpone when mortgage payments are due, but do not cancel the mortgage debt. Nevertheless, the fact that we have almost 76,000 people who have not been able to resume making their mortgage payments, most as a direct result of Hurricane Katrina, points to the need to get a housing and economic development program funded and under way in Louisiana and build support for the initiatives already undertaken in Mississippi.” Brinkman added that, “It is also important to realize that a number of homeowners continue to meet their financial obligations despite not being able to occupy their homes or being temporarily relocated for other reasons. These people are putting their faith and money into their expectations of a recovery along the Gulf Coast and those expectations must be met.” -

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