B&C Improving, But Weak Spots Remain

Data compiled by LoanPerformance, San Francisco, show improvement in the serious delinquency rate for both prime and subprime mortgage loans, but the data also show that some areas of the market continue to suffer from weakness.

The serious delinquency rate on prime loans - those more than 90 days past due or in foreclosure - fell 10 basis points to 0.74% in June, according to LoanPerformance. The greatest improvements were posted in Nevada, Utah and Maryland.

States with the highest serious delinquency rate on prime loans include Utah, Texas, Indiana, Ohio and Georgia.

And metropolitan areas that are experiencing "early warning" signs related to loans originated in 2003 include Salt Lake City, San Antonio, Dallas-Fort Worth, Atlanta, Indianapolis, Denver and Greenville, N.C., according to LoanPerformance.

The subprime serious delinquency rate also declined in the second quarter, according to LoanPerformance. Overall national serious delinquencies on subprime loans fell 98 basis points to 4.16% as of June 2004.

The lowest subprime delinquencies were found in California, Rhode Island and New Hampshire. States with the highest serious delinquencies on subprime loans were Mississippi, South Carolina, Indiana, Ohio and West Virginia.

LoanPerformance also breaks down delinquencies by "vintage," or year of loan origination. The 2000 book of business continues to be a weak spot for both prime and subprime loans, according to the company. Among subprime loans, nearly one in five originated in 2002 were reported to be seriously delinquent.

So far, the 2003 book of business is performing much better early in that portfolio's life.

LoanPerformance also noted a small decline in the delinquency rate for home-equity lines of credit. The company said that 0.18% of HELOCS were 90 or more days past due in June, down five basis points from one year earlier.

The highest delinquency rates for HELOCS were noted in West Virginia, Kentucky and Ohio.

LoanPerformance data show that recently originated loans account for the bulk of those outstanding. Among loans that conform to Fannie Mae and Freddie Mac underwriting standards, 48.8% were originated in 2003 and another 13.5% were originated in 2004. Among nonconforming loans, 48.5% were originated in 2003, and an additional 26.8% were originated in 2004.

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