Some economists are warning that the problems of credit quality in low- income mortgage lending could prove to be stubbornly persistent.

Falling buying power, coupled with increased consumer debt among households below median income, will inevitably lead to higher mortgage delinquencies, these economists say.

They are adding their voices to those of some major lenders, who have been warning for the past year of rising delinquencies in the lower income brackets.

"A lot of debt has been piled on low-income groups at the same time that their incomes are being constrained, and they are getting loans with high loan-to-value ratios," said Mark Zandi, chief economist at Regional Financial Associates.

"You put it all together, and you have substantially more credit problems for lenders who are focusing on these groups," Mr. Zandi said.

Added Sung Won Sohn, chief economist at Norwest Corp.: "Consumer debt is concentrated in low- and moderate-income households, whose real income has been trending down for some years now." As the economy slows down, he said, these borrowers will find it particularly difficult to make timely mortgage payments.

A mix of regulatory pressure and business opportunism has pushed many lenders into low-income lending in recent years, and they are unlikely to pull back, said Sam Lyons, a senior vice president at Great Western Bank, Chatsworth, Calif.

But concerns about delinquencies could bolster a trend toward extending subprime credit to low-income borrowers, Mr. Lyons said. Such loans are made at higher interest rates, allowing lenders to price for extra risk. But, he noted, they also raise thorny issues of discrimination.

Mr. Zandi's concerns are based on a couple of long-term economic trends.

First, inflation-adjusted incomes of those at the bottom end of the economic ladder have been declining over the past two decades. Between 1973 and 1993, real average family income fell almost 1% a year for those in the bottom quintile while rising for the top three quintiles, according to the Census Bureau.

For workers who are not well educated, wages are shrinking, and they are more prone to unemployment. If they do lose their jobs, they are likely to remain unemployed longer, Mr. Zandi said.

This has a common-sense implication for lenders, according to Mr. Zandi: "It's much more difficult for low-income groups to service their debt and not get into credit problems."

As their incomes shrink, these groups are turning increasingly to consumer debt to make ends meet. And that's the second long-term trend that worries economists.

According to a survey conducted by the Federal Reserve, debt service burdens rose for all households in the 1980s. But in the 1990s, the debt burden for households earning more than $50,000 annually began to fall in response to lower interest rates and less borrowing.

For households earning less than $50,000, however, debt burdens continued to rise. Many families also took advantage of low interest rates and relaxed lending guidelines to become homeowners in the past couple of years, Mr. Sohn said.

"When the economy was expanding and interest rates were declining, this didn't create a lot of problems," he said. "But as the economy slows down, I think we will begin to see some problems cropping up."

How badly will lenders be burned by these delinquencies?

Mr. Zandi said he expects wide differences in the performances of individual lenders' portfolios. But in general, he said, lenders have not priced for the increased risk of lending to low income borrowers.

Mr. Sohn concurred. "Financial institutions are generally not very good at pricing for additional risk," he said. "They are becoming more cautious, maybe somewhat belatedly."

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