No subprime slump

• By CHRIS GAUTREAU
• Advocate business writer
• Published: Apr 13, 2008 - UPDATED: 2 p.m.

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The foreclosure wave washing over some of the nation’s most lucrative housing markets has bypassed Baton Rouge so far.

Buttressed by a steady economy, relatively stable home prices and a different blend of factors driving the local market, the Baton Rouge area has not experienced the high rate of foreclosures pummeling other parts of the country, especially the West and Midwest.

While some experts warn the situation could still worsen here, “subprime” loans to borrowers with poor credit histories have yet to create the mess seen elsewhere.

“I don’t believe we have the same problems in Baton Rouge, or even in Louisiana, that are in other states,” said Joy Murray, regional manager for Consumer Credit Counseling Services. “Because of job security and Louisiana being more a family state than people moving in, I think our economy has been stable.”

Directly comparing economic trends on the local, state and national levels is difficult because of the turbulent effect of the 2005 hurricanes on the Louisiana housing market.

But local foreclosure rates and bankruptcy filings — key indicators of troubled personal finances — don’t suggest an immediate problem.

Sales of foreclosed properties by the East Baton Rouge Sheriff’s Office, for example, have been fairly steady. The office held 878 real estate sales in 2003. The number fell slightly in 2004, then plummeted over two years to 414 in 2006.

The sharp fall came after many of the nation’s mortgage lenders and the Federal Housing Administration suspended foreclosures because of the 2005 hurricanes. Those suspensions were lifted in 2006.

Last year foreclosures rose slightly to 524, but that is still below prehurricane levels.

The tally is not an exact indicator of troubled mortgages in the local market, but does give a broad view of any trouble.

Figures from the Mortgage Bankers Association show that seriously delinquent mortgages in Louisiana — those that are 90 days or more behind in payments — have actually decreased since last summer, when the national credit crisis began in earnest.

Jay Brinkmann, the association’s vice president for research and economics, said Louisiana has been somewhat immune because fewer high-risk mortgages were made here to start with. Also, home prices have not crashed as they have in other markets, he said.

Credit crisis spreads
Foreclosure rates in California, Nevada, Michigan, Ohio and Florida have reached record levels after already red-hot real estate markets started overheating last year. Rates in Florida alone, for example, are 70 percent higher than one year ago.