Delinquencies Rise Sharply

The national delinquency rate for residential mortgage loans rose to 4.70% at the end of last year, up from 4.38% a year earlier, according to the Mortgage Bankers Association.The delinquency rate was also up by 26 basis points since the end of the third quarter. However, the percentage of loans in the foreclosure process nationally fell 16 bps from that of the previous year, though the fourth quarter's foreclosure inventory was up 2 bps from that of the third quarter. Doug Duncan, the MBA's chief economist, said the increase is not surprising. "We have been expecting an uptick in delinquencies due to a number of 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," Mr. Duncan said. Hurricane Katrina also had a big impact. If the effect of last year's hurricanes is eliminated from the numbers, the MBA said the national delinquency rate would have been 4.55% at the end of last year. The MBA can be found online at http://www.mortgagebankers.org.