Lenders worried about high delinquency rates in their 1993, 1994, and 1995 loans can look to the heartland for stability.
Rates of serious delinquency - 90 days or more overdue - on loans originated in the Midwest continue to be lower than the nationwide average, according to data compiled by Mortgage Information Corp., San Francisco.
This is especially reassuring as loans made in 1994 and 1995 in other areas of the country begin to show significantly higher risk profiles than those from previous years.
Home loans originated in the Midwest also outperform national averages for several individual loan characteristics, including loan-to-value ratios and loan size, reports Mortgage Information.
The key to the Midwest's positive performance is the healthy economic condition of the region, according to Joe McDonnell, a regional supervisor for the Department of Housing and Urban Development.
Both Illinois and Ohio saw jobs increase by more than 100,000 over the 12 months through September, Mr. McDonnell said.
"It is just great," he added from his Chicago office. "I was here 20 years ago and the economic conditions were really depressing."
Positive economic performance in the area dates to the early 1990s, when growth was spurred by the increased number of manufacturing jobs. Despite the fact that manufacturing demand in the area has slipped since then, the service and retail trade industries have stepped in to pick most of the slack, Mr. McDonnell said.
Illinois, Ohio, and Michigan also registered "fairly impressive" increases in demand for exports in the 12 months ended Sept. 30. Demand for exports to Japan, Europe, and Canada increased 10% from the levels of the previous 12 months, Mr. McDonnell said. He expects the figures for the 12 months ending this Sept. 30 to show further, but more moderate, improvement in the region's economic performance.
Government loans are one dark spot on the Midwest's performance. VA and FHA mortgages are performing slightly worse that the national average: 2.47% were seriously delinquent as of September, compared with 2.41% nationwide.
Delinquency rates are much higher in the Chicago area, where government loans are concentrated, according to Ian Wong, marketing manager for Mortgage Information. Prices of homes have increased in the area, he added. "You saw the same phenomenon in Seattle and Denver."
