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Delinquencies Fall, Foreclosures Inch Up

The overall seasonally adjusted delinquency rate for home loans fell by 16 basis points to 4.33% in the first quarter, but new foreclosures have increased slightly, according to the Mortgage Bankers Association.

The MBA's quarterly delinquency survey showed that, on a seasonally adjusted basis, loan performance between the fourth quarter of 2003 and the first quarter of this year improved in all categories except new foreclosures, which inched up to 0.46% from 0.45%. (The foreclosure inventory percentage at the end of the first quarter was 1.27%, two basis points lower than the fourth-quarter rate of 1.29%.)

"With the ongoing strength of the economy during the first quarter of 2004, delinquency rates continued their fall from post-recession peaks in the second quarter of 2003," said Doug Duncan, MBA's chief economist and senior vice president. "An expectation of strong job growth for the rest of the year and continued strength in the housing market bodes well for lower delinquency and foreclosure rates in the upcoming quarters."

The MBA survey found that 2.26% of prime loans were 30 days or more late on repayment in the first quarter, down from 2.40% in the fourth quarter of 2003.

The delinquency rate for loans backed by the Federal Housing Administration fell 55 bps, to 11.68%, and the rate for loans backed by the Department of Veterans Affairs fell 62 bps, to 7.37%.

The MBA said 11.19% of the subprime loans in its conventional loan category were late in the first quarter, down from the previous quarter.

MBA has conducted the National Delinquency Survey on a quarterly basis since 1953. The survey covers more than 37 million loans on one-to-four-unit residential properties, representing more than 80% of all first-lien residential mortgage loans.

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