Magazine article American Banker

Katrina Worsens an Expected Rise in Delinquencies

Magazine article American Banker

Katrina Worsens an Expected Rise in Delinquencies

Article excerpt

Hurricane Katrina worsened an expected fourth-quarter rise in mortgage delinquencies, the Mortgage Bankers Association said Thursday.

The seasonally adjusted delinquency rate for one-to-four-unit residential mortgages rose for the third consecutive quarter, the trade group said. The rate rose 26 basis points from the third quarter and 32 basis points from a year earlier, to 4.7%.

The effects of Katrina contributed 15 basis points to the year-over-year rise, the MBA said.

Doug Duncan, its chief economist, said in a conference call Thursday that Katrina hurt all loan types.

Even without the effects of the storm, the increase in delinquencies was not surprising, he said.

"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 adjustable-rate mortgages and subprime mortgages, as well as the elevated level of energy prices affecting households and rising interest rates," he said.

The percentage of loans in the foreclosure process fell 16 basis points from a year earlier but rose 2 basis points from a quarter earlier, to 0.99% at yearend.

Subprime loans were hit hardest. The delinquency rate for all subprime loans surged 130 basis points from a year earlier and 87 basis points from the third quarter, to 11.63%. However, the effects of Katrina raised the fourth-quarter rate by 117 basis points, the MBA said. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.