Large Numbers in Gulf Coast Not Paying Mortgages
Significant numbers of home owners in areas of the Gulf Coast devastated by Hurricane Katrina last year have yet to be able to resume making their regular mortgage payments, according to the latest National Delinquency Survey released last Thursday by the Mortgage Bankers Association.
Almost 76,000 home owners in Louisiana and Mississippi were seriously delinquent on their mortgages at the end of December, the survey found. These are loans that are 90 days or more past due or in the process of foreclosure, and they normally would be considered to be in default at this stage, but many borrowers have been taking advantage of forbearance programs offered by their lenders.
In the immediate aftermath of Katrina at the end of last September, 24.6% of all mortgages in Louisiana and 17.4% in Mississippi were delinquent, or 30 days past due. By the end of 2005, those percentages had declined to 20.8% and 16.9%, respectively. As expected, a majority of the loans that were only 30 days delinquent in September have now fallen into the 90 days or more seriously delinquent category.
As a result of the mortgage industry’s forbearance programs, the mortgage bankers reported, new foreclosures have actually dropped, to only 0.16% in Louisiana and 0.26% in Mississippi at the end of December, compared to 0.67% and 0.78% respectively during the same period a year earlier.
The national average for foreclosures started stands at 0.42%.
“The fact that we have almost 76,000 people who have not been able to resume making their mortgage payments, most as a direct result of Hurricane Katrina, points to the need to get a housing and economic development program funded and under way in Louisiana, and build support for the initiatives already undertaken in Mississippi,” said Jay Brinkmann, vice president of research and economics at MBA.
“It is also important to realize that a number of home owners continue to meet their financial obligations despite not being able to occupy their homes or being temporarily relocated for other reasons,” he said. “These people are putting their faith and money into their expectations of a recovery along the Gulf Coast and those expectations must be met.”
In Louisiana, 16.1% of prime loans were delinquent, 33.9% of subprime loans and 31.8% of FHA loans. In Mississippi, 11.8% of prime loans were delinquent, 31.1% of subprime loans and 24.9% of FHA loans.
For seriously delinquent loans past due for 90 days or more or in foreclosure, in Mississippi the percentage of prime loans was 9.7%, 24.3% for subprime and 21.1% for FHA. In Mississippi, the percentages were 6.3%, 19.8% and 13.5%, respectively.