Originally created 03/12/98

More homeowners fall behind on mortgage payments



WASHINGTON -- The number of Americans behind on their mortgage payments increased at the end of 1997 to the highest level in nearly two years.

Mortgage delinquencies rose to a seasonally adjusted 4.36 percent in the October-December quarter, the Mortgage Bankers Association of America said Wednesday.

That was up from 4.26 percent in third quarter and marked the highest delinquency level since the first three months of 1996. It was the fourth increase in five quarters and the largest in a year.

Still, the rate was in the low end of its recent range. It hit about 5 1/4 percent at the end of the 1990-91 recession and fell to just under 4 percent three years later.

David Lereah, the association's chief economist, said the increase was concentrated among adjustable-rate mortgages -- which account for roughly one-fifth of all mortgages.

Many adjustable-rate mortgages originated in the last half of 1996 had their first adjustment during the last half of 1997. In some cases, the adjustment was as much as 2 percentage points, resulting in quite a payment shock, Lereah said.

However, he said the large number of refinancings in recent months to some of the lowest fixed rates in 30 years should help temper any further increases in the delinquency rate.

Delinquencies increased in all regions of the country in the fourth quarter: from 5.01 percent to 5.21 percent in the South; from 4.07 percent to 4.17 percent in the Northeast; from 3.65 percent to 3.70 percent in the West; and from 3.80 percent to 3.83 percent in the Midwest.

The delinquency rate is the proportion of mortgages with payments 30 or more days overdue. The association's survey covers 23 million loans, or about half of the residential mortgages in the country.

The percentage of loans in foreclosure at the end of the fourth quarter rose to 1.11 percent, up from 1.09 percent three months earlier.