WASHINGTON - Low down payment mortgages financed by Fannie Mae and Freddie Mac in lower-income urban areas are likely to default more frequently than similar loans made in other areas, according to a preliminary study by government regulators.

The Office of Federal Housing Enterprise Oversight has found that loans with a 95% loan-to-value ratio in "underserved" areas have higher rates of default than loans of the same ratio in other areas.

And default rates increase more steeply as down payments shrink in underserved areas than they do in other areas, according to the oversight office.

The oversight office's chief economist, Patrick Lawler, who presented these findings at a recent convention of the Mortgage Bankers Association of America, said the regulator could not explain the different default rates.

Mr. Lawler stressed in an interview that research on the subject is limited.

Freddie Mac spokeswoman Cheryl Regan said her agency was unwilling to comment on its regulator's findings about the performance of loans in underserved areas. But in general, she added, Freddie Mac believes that credit history is a better predicter of whether the loan will repay than income, race, or neighborhood.

Efforts to reach Fannie Mae officials were unsuccessful.

In its study, the oversight office did not control for other variables that might affect default rates, such as credit history.

The study defined underserved areas as central-city census tracts with a high concentrations of minority or low-income residents. This definition is similar to that currently being proposed by the Department of Housing and Urban Development in regulations governing the affordable-housing activities of Fannie Mae and Freddie Mac.

HUD has proposed that the two secondary-market agencies increase their lending in underserved areas.

Mr. Lawler also presented findings showing that default rates are "significantly higher" for low down payment loans purchased or securitized by the agencies than for loans with higher down payments

For loans originated from 1979 to 1985, those with a 95% loan-to-value ratio were nearly five times as likely to default as those with an 80% ratio, the study found.

Loans with a 95% ratio defaulted twice as frequently as loans with 90%, the regulator found.

Loans made from 1986 to 1991 had lower rates of default than those in the earlier sample, partly because of tighter underwriting, Mr. Lawler said.

So far, default rates do not accelerate as much when loan-to-value ratios increase from 90% to 95% as they did in the earlier sample, he said.

Loans with a 90% ratio defaulted twice as frequently as those with 80%, Mr. Lawler said.

Last year Fannie Mae, the Federal National Mortgage Association, launched 97% loans. To manage the risk, the agency requires homebuyer counseling and early delinquency intervention.

Mr. Lawler said that it was hard to say how homebuyer counseling would affect default rates.

The loans appear to be carefully underwritten, he said, judging by mortgage insurance rejection rates.

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