New study shows higher foreclosure rates on 1994-95 mortgages linked to deteriorating borrower...

JERSEY CITY, N.J.--(BUSINESS WIRE)--March 14, 1996--The Mortgage Research Group, Inc., today released a new study of the underlying causes of the early and sharp increases in delinquencies and foreclosures detailed in the recently released study "National Foreclosure Rates 1991-95."

While

industry speculation has centered on higher LTV lending programs as the cause of these troubling trends, the study, "Mortgagor Credit 1991-95" clearly shows that 1993 borrowers had the highest credit quality of the period and that credit quality deteriorated significantly in 1994 and 1995. The results strongly suggest that this -- and not higher original LTV's -- is the cause of the earlier occurrence of notable foreclosures in the 1994-95 mortgage originations.

"Higher LTV lending shows up as higher levels of foreclosures," said Gordon Monsen, principal at MRG. "The earlier aspect of the foreclosures in 1994-95 appear to result from lower credit quality borrowers running out of their savings sooner than prime borrowers when confronted with job loss." The study shows that more than twice the number of 1994-95 mortgagors are presently using more than 90% of their bank credit card lines compared with 1993 mortgagors and that this high bank card use has the highest probability of default.

The study is based on the firm's Mortgage Data Warehouse, the largest mortgage data resource in the country built as part of MRG's "strategic alliance" with TRW Information Systems and Services. MRG provides advanced mortgage portfolio analytics and research. MRG Chairman, Blaine Roberts noted, "higher LTV lending programs reflect the fact that home buyers have less savings from which to obtain their downpayments. These lower savings mean they will tend to default sooner, if they lose their sources of income." The firm based in Jersey City, released this study as part of its continuing series of research into the trends in and causes of mortgage default in the recent years of issue.

CONTACT: MRG, Inc.

Gordon Monsen, 201/333-7771 (voice)

201/333-5055 (fax)

E-mail: gordon@tmrg.com