Serious delinquencies on nonagency mortgage loans in key areas of Louisiana and Mississippi hit by hurricanes Katrina and Rita are declining, according to a Friedman Billings Ramsay report.The default rate on prime loans (not securitized by Fannie Mae and Freddie Mac) in the 12 hardest-hit metropolitan statistical areas (including Beaumont, Texas) fell from 10.50% in January to 9.58% in February. Defaults (90 days or more past due) on subprime and alternative-A loans also declined significantly. The FBR research paper attributes the decline in defaults to federal disaster relief and payments on federal flood insurance and private hazard insurance claims. In mid-March, the Federal Emergency Management Agency said it had paid out nearly 90% of all flood insurance claims related to hurricanes Katrina and Rita, totaling $11.3 billion. Separately, Freddie Mac announced an extension through Aug. 31 of mortgage payment relief for homeowners in the Gulf Coast states most affected by the hurricanes.
