Mortgage holders keeping up, survey finds

The number of U.S. homeowners behind in their mortgage payments dropped in the third quarter of 2002, and the number of those in the foreclosure process rose only slightly, showing that people are keeping up with their mortgage payments despite the sluggish economy, according to a report issued yesterday.

The quarterly National Delinquency Survey, issued by Mortgage Bankers Association in Washington, D.C., showed total delinquencies at 4.66 percent at the end of the third quarter of 2002. That's down from 4.77 percent in the second quarter and 4.83 percent in the year-earlier quarter. A mortgage is considered delinquent if it is 30 or more days overdue.

For subprime loans — higher-interest loans for higher-risk borrowers — the delinquency rate was steeper, but it was also moving down: 14.28 percent of subprime loans were delinquent in the third quarter, compared with 15.67 percent in the second quarter.

Of all loans, 1.15 percent were somewhere in the foreclosure process, up from a revised 1.13 percent in the second quarter. The number of loans entering foreclosure dropped slightly, to 0.37 percent, nearly unchanged from 0.38 percent in the second quarter.

"There's some good news in this survey," said Doug Duncan, the banker's association chief economist. "It shows that there's no danger that the housing sector won't continue to be an important support for economic activity."

The number of subprime loans in the foreclosure process rose, however, to 8.58 percent in the third quarter of 2002 from 8.49 percent in the second quarter.

The association said, however, that its subprime study, new this quarter, covered fewer than half of all subprime loans.