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Tardy mortgages reflect struggling economy

Mississippi’s 14.1 percent delinquent rate applies to loans by 30 days or more

Mississippi mortgage bankers are awaiting third quarter tallies from the Mortgage Bankers Association to learn whether the state will continue to have the unfortunate distinction of having the nation’s highest rate of tardy home-loan payments.

Mississippi delinquent mortgage rates began climbing as it became a national leader in sub-prime mortgage borrowing. Tardy mortgage payment rates declined after Katrina, a period in which lenders granted borrowers more forbearance than usual.

Mississippi delinquent mortgage rates began climbing as it became a national leader in sub-prime mortgage borrowing. Tardy mortgage payment rates declined after Katrina, a period in which lenders granted borrowers more forbearance than usual.

The 14.1 percent rate for the second quarter matched Nevada, where the collapse of a vastly over-heated Las Vegas housing market has given the state one of the bleakest economies in the country. The Mortgage Bankers Association classifies all loans 30 days or more overdue as delinquent and does not include homes in foreclosure in its delinquency tallies.

Mississippi delinquent mortgage rates began climbing as it became a national leader in sub-prime mortgage borrowing. Tardy mortgage payment rates declined after Katrina, a period in which lenders granted borrowers more forbearance than usual.

The rates resumed their climb in recent years, topping the nation at 14.40 percent at the end of the third quarter of 2009.

Whatever chances Mississippi had of bringing the late-payment rate down likely vanished with the BP oil spill last spring, according to Scott Andrews, a Wells Fargo senior economist who spoke in Jackson last Tuesday at the Mississippi Council on Economic Education luncheon.

A spike in unemployment in the summer months from the spill “certainly can affect those numbers,” Andrews said in an interview after his talk.

The third quarter may see the state’s mortgage delinquency rate decline slightly, he said.  “The Mississippi unemployment rate has come down from summer. That could help a little bit,” he added.

“Still, it does suggest financial strain as a result of high unemployment and weak economic activity.”

Overall, Mississippi’s lenders and borrowers are suffering the consequences of a banking industry that did “40 years of mortgage lending in seven years,” Andrews told the luncheon gathering.

Mississippi’s third quarter foreclosure rate rose 40.1 percent from the second quarter of 2010, according to RealtyTrac, a California real estate survey and data gathering firm.

Lenders took back the property of just more than 700 Mississippi homeowners during the third quarter of 2010, RealtyTrac reported.

RealtyTrac said that in addition to the repossession of 727 homes, another 705 property owners received a notice of a pending foreclosure sale during the July-September period.

The rate of late mortgage payments could mean further escalation on the foreclosure front. “Delinquencies do lead to more foreclosures,” Andrews said.

Increasing numbers of tardy mortgages followed by new foreclosures mean it will take longer for banks to begin fully contributing to an economic revival, Andrews said. “Certainly it’s prolonging the day that banks will be able to support the recovery.”

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