The latest figures from Moody's mortgage credit indexes show that overall delinquencies are down somewhat from previous highs.

The figures cover performance for all Moody's-rated pools, which tend to be backed by nonconforming jumbo mortgages and have a large concentration in California.

The figures show that despite the latest decline, two important events in early 1994 caused disruptions to U.S. mortgage markets that still linger:

*The sharp spike in 30-day delinquency rates for March 1994 appears to be related to the January 1994 Northridge, Calif., earthquake, though it is difficult to establish a solid link. A similar spike afflicts 60-day delinquencies in April 1994 and 90-day delinquencies in May 1994.

*February 1994 saw a dramatic tightening in the Federal Reserve's monetary stance, which continued until July 1995. Because adjustable-rate mortgage borrowers have borne the brunt of the Fed's actions, delinquency rates for ARMs are trending upward.

Recent sustained ARM delinquency rates run contrary to an emerging seasonal pattern. Excluding extraordinary events, ARM delinquencies typically ease during the spring and rise in late summer. So far this year, ARM delinquencies have remained high through the spring and early summer.

This may reflect payment adjustment shock as ARMs reset to higher coupons and, in fact, may reverse as the interest rate environment improves. Short-term interest rates peaked in December 1994 and have eased about a point since then.

Contributing most to sustained delinquency rates are pools originated in 1989, 1990, and 1991, years in which housing prices in many areas peaked. Homeowners who purchase at the market peak often have difficulty selling the property without hardship.

Moreover, pools originated during these years have seasoned to the point where delinquency rates typically begin to reach full stride. Pools originated in 1987 and 1988 are in their ninth and eighth years and should show performance improvement. Their high delinquency and foreclosure rates may reflect relatively small current pool balances rather than dramatic declines in housing prices since the origination dates.

Foreclosure rates for all mortgages have risen only slightly since bottoming out in November 1994. But foreclosure rates for ARMs bottomed out in July 1994 and have surged since then.

Foreclosure rates for fixed-rate mortgages have been flat for the past year at very low levels. Because of the lag involved in bringing a property to foreclosure, this surge may be simply a reflection of the jump in ARM delinquencies noted above.

June 1995 may mark a turning point in ARM foreclosure rates. High foreclosure rates for pools closed during 1989 and 1990 - currently in excess of 4% - will not necessarily translate into high loss rates (based on original pool balances), because these pools are close to being fully paid down. As of June 1995, the 1989 and 1990 pools had pool factors of 17% and 20%, versus 48% for all pools.

The yearlong rise of ARM loans in the foreclosure process has filtered down to ownership of foreclosed property as well. While foreclosure rates for ARMs have climbed 16 basis points, overall real-estate-owned rates are up about 7 basis points from their November 1994 trough. But fixed-rate REO rates have held steady since May 1994. Pools originated in 1990 have been saddled with the highest rates of REO, exceeding the 4% level since February 1994.

Ultimately, investors care about pool losses and the impact of these losses on their securities. We calculate losses as a cumulative percentage of the original pool balance. Loss rates for all rated mortgage pools now stand at 0.63%. Loss rates for ARMs currently total 0.91%, while those for fixed-rate mortgages total only 0.34%

Pools originated in 1989 and 1990 have had the highest loss rates to date. Now that the 1990 group has become the first to break the 2% barrier, loss rates should continue to rise.

Mr. Fons is vice president and economist at Moody's Investors Services Inc., New York.

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