Foreclosures still rare in Katrina-ravaged zone

Martin Wolk Chief economics correspondent • Profile • E-mail

Nearly one in every eight mortgage holders in Louisiana and Mississippi was considered seriously delinquent at the end of last year, but few lenders initiated foreclosure proceedings in the hurricane-ravaged area, a mortgage bankers group reported Tuesday.

Nearly 76,000 out of a total 632,000 mortgages were 90 days overdue or more as of Dec. 31, putting them in the seriously delinquent category, according to the Mortgage Bankers Association study. But almost no new foreclosure proceedings have been started because of government and industry actions giving owners more time to bring their mortgages up to date.

Overall about 21 percent of mortgages in Louisiana and 17 percent in Mississippi were at least 30 days delinquent as of Dec. 31, representing a slight improvement over the previous survey conducted at the end of September, just a month after Hurricane Katrina severely damaged or destroyed thousands of homes along the Gulf Coast.

But most of those mortgages have now moved into the "seriously delinquent" category, meaning payments are at least 90 days past due.

Normally that would mark a time when mortgage lenders could initiate action to take control of the property through foreclosure, but so far that has been extremely rare in the hurricane zone, according to the mortgage bankers.

In fact, foreclosures in Mississippi and Louisiana are much more rare than elsewhere in the country, in part because of government and industry "forbearance" programs that give homeowners more time to bring their loans up to date.

The rate of new foreclosures in the fourth quarter was only 0.16 percent in Louisiana and 0.26 percent, compared with the national rate of 0.42 percent. In both states, the rate was at least three times as high in the comparable year-earlier period.

In Louisiana, for example, lenders began foreclosure proceedings on only 657 homes in the fourth quarter, compared with nearly 2,400 in the second quarter, the last full quarter before Katrina, according to the MBA figures. In Mississippi lenders began foreclosing on 576 properties, compared with 1,400 in the second quarter.

All told there are about 630,000 properties with mortgages in Louisiana and Mississippi, according to MBA figures, of which 123,000 were at least 30 days delinquent. In the New Orleans area alone, at least 95,000 residential structures, or two-thirds of the total, suffered damage totaling $8 billion to $10 billion, according to a previous study by the mortgage bankers.

A spot check with real estate agents and other officials in Bay St. Louis and Waveland, Miss., a badly damaged region where MSNBC.com has done extensive reporting over the past six months, confirms that few if any properties have been foreclosed on since the storm swept through.

"There was speculation there would be massive foreclosures, but I have not seen any," said agent Herb Dubuisson Sr. of Coldwell Banker Alfonso Realty Inc. in Waveland, who has been selling homes in the region for more than 30 years.

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