In the wake of hurricanes Katrina and Rita, massive property damage and high unemployment rates pushed default rates on subprime mortgages up to 32.6% in Louisiana and 29.9% in Mississippi as of Dec. 30, according to Friedman Billings Ramsey.But the bad news is not over, according to the investment banking firm. FBR said it expects conditions to get worse as this year progresses, with subprime defaults (90 days or more past due) in New Orleans rising from 47.8% to 61.3% by the end of the year, and defaults in Biloxi, Miss., rising from 35.4% to 66.4% by year-end. Nationwide, the default rate on subprime mortgages was 7.07% at the end of 2005. The FBR research report on the performance of residential asset-backed securities also shows that defaults on nonagency prime loans had climbed to 13.20% in Louisiana and to 6.02% in Mississippi as of Dec. 30. Hibernia National Bank, a Fannie Mae/Freddie Mac prime lender based in Baton Rouge, La., reported that its default rate was 6.72% as of Dec. 30, up from 0.33% at year-end 2004, according to the Quarterly Data Report, a MortgageWire affiliate.

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