In advance of final numbers, due out in late August, ForesightAnalytics uses earnings reports and call report filings fromseveral banks to come up with its data, which has been quiteaccurate. Foresight partner Matthew Anderson tells GlobeSt.com thatwhile single family and condo construction loans are the mainsource of the problems--delinquency rates for for-sale residentialconstruction loans are in excess of 10% compared to the low singledigits for commercial--delinquency rates on the commercial side areon the rise as well.

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"While the stock market seems to think the worst is over ourdata shows that, as of the second quarter, things were stilldeteriorating on all fronts," Anderson says. "The results are notexactly alarming, but certainly there is cause for a little concernthat commercial mortgage delinquency figures are continuing toclimb."

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The total delinquency rate for commercial mortgages rose to 2.1%in Q2 from 1.8% in Q1 and 1.6% in Q4 2007. The increase is mainlydue to nonaccrual loans, which increased to 1.1% in Q2 from 0.9% inQ1.

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"The commercial mortgage sector remains much healthier thanfor-sale residential [but] concerns about valuations and tighterunderwriting standards are constraining availability of debtfinancing," Anderson says. "CMBS deal flow remains very low,limiting borrowers' options. A sharper or prolonged economicdownturn could pose further problems for the commercial mortgagesector."

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The total delinquency rate for first lien single familymortgages also rose at an accelerated pace in the second quarter,jumping to 5.4% in Q2 from 4.7% in Q1. In Q4 2007, the rate was4.2%. The nonaccrual rate also rose sharply, to 2.7% in Q2 from1.9% in Q1. Less than two years ago, the rate was as low as 0.5%,and the rates likely will rise further, Anderson says, as "fallinghome prices and weak sales volume weigh on the housing sector."

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As for the accuracy of its estimates, Foresight's preliminaryconstruction loan delinquency rate for Q1 was 7.1%, one tenth ofone percent off from the actual numbers reported one month later.Its early Q1 estimate for commercial mortgage delinquency andnon-accrual rates matched the actual numbers.

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