Louisiana Foreclosure Rate Rises as Storm Rule Expires

Foreclosures on Louisiana homes jumped 35 percent during the third quarter of 2006 as lenders were able to move against hurricane victims who had not made mortgage payments since the 2005 storms.

At the end of the third quarter, there were 1,866 home loans in foreclosure, up from 1,381 at the end of the second quarter throughout Louisiana, the Mortgage Bankers Association reported last week.

Freddie Mac, an agency that provides mortgages to banks and other lenders, implemented blanket moratoriums on foreclosures in parishes affected by hurricanes Katrina and Rita.

Those moratoriums expired on August 31, so the third quarter was the first period in which storm-related foreclosures occurred.

Many foreclosure cases that began in 2005 but stalled because of the hurricanes also moved forward in the third quarter and were included in the figures.

“Even though there was an increase, it was still way below historic norms for similar periods,” said Jay Brinkmann, vice president of research and an economist for the Washington, D.C.-based bankers association.

Louisiana generally records about 2,600 new foreclosures each quarter, he said. Officials said the number of foreclosures tied to the 2005 storms is still small, even as the New Orleans housing market is still ravaged by Katrina’s after-effects.

Freddie Mac, which allowed 17,832 borrowers to delay the post-hurricane resumption of their mortgage payments by months, said fewer than 1 percent of those borrowers, or 132, have been foreclosed on, said agency spokesman Brad German.

Only 48 of those 132 are in the New Orleans area. The remainder of the delayed Louisiana mortgage payments are being worked out, have been made current or continue to be delayed.

Freddie Mac gave 35,000 area home owners extra time to make payments after the storms, said spokeswoman Chrissie McHenry. McHenry said she did not know of any foreclosures that had been initiated.

In a sign that many of those hurricane-affected borrowers are working their way through their financial obstacles, the number of people behind on their mortgage payments fell in the third quarter. The biggest decline involved second mortgages which were days or more past due, Brinkmann said.

Of the more than 424,000 total home loans statewide, 16,839 were more than three months past due at the end of the third quarter, down from 22,835 at the end of the second quarter.

Most of those loans, about 13,000, are in the disaster area.