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Mississippi mismatch: Delinquent mortgages high, foreclosures low

Mississippi has long had the distinction as a state with one of the highest delinquent mortgage rates in the country. January was no exception.

The state’s 5.93 percent 30-day delinquent rate topped all over states, including the troubled mortgage market states of Florida, Nevada and California, the Mortgage Bankers Association reported last week.

Yet Mississippi ranked 46th in the nation in foreclosure numbers, according to RealtyTrac, a California-based real estate research firm.

Mississippi had one foreclosure notice filed for every 4,391 housing units in January. Nationally, lenders filed a foreclosure notice on one out of every 497 housing units. Nevada had the worst foreclosure showing in January, with one foreclosure noticed filed for every 93 housing units, RealtyTrac reported. Arizona followed with one foreclosure filing for every 175 housing units.

Ranking for Mississippi neighbors were Arkansas, 19; Tennessee, 23; Louisiana, 27; Alabama 34.

Mississippi’s mortgage delinquencies are mostly a reflection of the state’s low wages, said Ed Sivak, Hope Credit Union senior vice president for policy and evaluation.

“Historically it’s been kind of a mismatch,” said Sivak, whose lending institution is an arm of the non-profit Hope Enterprise Corp.

“We’ve been at the top of the pack in terms of delinquencies. We are a low-wage state and people do work to get by.”

And until recently an eagerness of banks to give non-traditional mortgages, such as adjustable rate and balloon loans, kept the delinquencies high. Mortgages loans outside of the traditional fixed-rate variety typically have a delinquency and default rate more than double conventional ones, according to a mid-decade research report by Hope Enterprise Corp., formerly Enterprise Corporation of the Delta.

While there’s been a notable drop in sub-prime lending in the state, the decrease has resulted in fewer mortgages – thus fewer opportunities for mortgage defaults, according to Sivak.

“The data show that with the marked decrease in that type of lending in this state, people have experienced challenges getting mortgages.”

As for the low foreclosure rate, a mortgage lending landscape dominated by medium-to-small size banks is likely a factor in keeping down the rate. They are not as quick to pull the trigger on repossessing a home as are the giant banks, Sivak theorized. “We don’t really have a high prevalence of the big national banks. So folks are going to be in a position to work things out.”

Sivak said the cost of a foreclosure and the prospect of a bank getting stuck with maintaining a deteriorating property most likely is a factor as well.  “I’ve heard that in rural areas in particular if a loan is very delinquent” and the community is “experiencing population loss, the cost of foreclosure and resell is too high,” he said.

The result: “You never get to the point of foreclosure.”

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