Representatives of Eastern Bank say only 0.26 of the bank’s loan portfolio fell into the delinquent category as of Oct. 31, contrasting sharply with a Mortgage Bankers Association of America study that found 3.77 percent of loans in the Bay State were past due in the third quarter this year.

Delinquency rates inched up in the third quarter nationally, according to a survey by the Mortgage Bankers Association of America, but Massachusetts bankers say that the number of troubled loans locally has not increased significantly.

The survey looked at 140 servicers, including banks, savings and loans and mortgage companies, and found that the seasonally adjusted delinquency rate for mortgage loans on one- to four-unit residential properties rose to 4.87 percent in the third quarter of this year. That represents an increase of 24 basis points from the second quarter of 2001 and an 86 percent increase from the third quarter last year.

Although there are more delinquencies, most are in the early stage – falling into the 30-day late category. In that category, delinquencies increased to 3.35 percent, up 18 basis points, while those in the 60-day delinquency category rose just 3 basis points to 0.79 percent. Foreclosures rose 4 basis points to 0.95 percent.

According to the study, the rise in delinquency rates was due to the slowing economy, rising unemployment rates and the events of Sept. 11, all of which contributed to a growing number of late payments.

The weakening GDP [gross domestic product] and job losses in the technology and manufacturing sectors have affected homeowners’ ability to keep their mortgage payments current, said Douglas G. Duncan, MBAA’s chief economist.

Additionally, the delinquency rate increased for Federal Housing Administration and Department of Veterans Affairs loans, which rose to 11.36 percent, up 57 basis points, and 8.11 percent, up 48 basis points, respectively. Conventional loans experienced a 20 basis-point increase from the second quarter of 2001 to 3.13 percent.

Although the study cites foreclosure rates in the Northeast as being the highest in the nation at 1.16 percent, Massachusetts is faring better than most other New England states with just 3.77 percent of loans past due, compared with 4.05 percent in Connecticut and 4.47 percent in Rhode Island. Vermont fared best with just 2.88 percent of past due loans. Overall in New England, 3.84 percent of loans were past due in the third quarter, according to the study’s findings.

But bankers here disagree with those numbers.

We’re just not seeing it [increased delinquency rates]. We are absolutely not seeing it, said Joseph J. Bartolotta, spokesman for Boston-based Eastern Bank.

Throughout 2000, Eastern experienced a 0.23 percent rate in delinquent loans, he said.

Then [on] Sept. 30 it popped up to 0.29 percent – not a big jump, but it was statistically notable. What did Sept. 11 do to stop people from paying? It was probably distraction. People’s minds were elsewhere and perhaps the mail was slow a little bit. But it was just that one blip because, at the close of Oct. 31, it had dropped back down to 0.26 percent, he said.

So, despite high delinquency rates in states like Georgia and Maryland, Bartolotta said Massachusetts banks are not experiencing any significant increase in overdue payments.

It’s probably because, despite everything you’ve heard about layoffs locally, the economy is still holding pretty strong, he said.

Additionally, with the refinancing and the opportunity to lower your interest rates, people have been able to lower their monthly payments, making it easier to make these payments, he said, adding that while that should prove true nationwide, Massachusetts residents are perhaps savvier at taking advantage of rates.

‘Potential Problems’
Kevin F. Kiley, chief operating officer of the Massachusetts Bankers Association, echoed Bartolotta’s conclusions, saying although there has been anecdotal evidence of a few problem loans, he hasn’t seen evidence of a significant increase.

Generally, people have been able to continue making their payments. Clearly, [bankers] are becoming extremely vigilant in insuring they keep their eye on their exiting loan portfolio for any potential problems that may arise, said Kiley. This includes reaching out to customers whenever practical to try to accommodate any problems arising from either the tragedy of Sept. 11 or the recession before the loans become problems, he said.

But we’re not seeing any significant uptick in trouble loans, said Kiley. Trouble loans are usually defined as those that are more than 60 or 90 days past due.

There might be a small, modest increase, but I don’t think it’s anything of concern. It’s more a [result of] the downturn in the economy; there’ve been layoffs, so consequently some of that would occur, he said.

Additionally, the events of Sept. 11 had such a profound effect on the psyches of so many Americans it might have legitimately been the case that many people simply forgot to mail payments. It wasn’t intentional, said Kiley.

Conversely, the downturn in the economy can be pointed to for actually helping some consumers, he said. Low interest rates have spurred a refinance boom that has benefited lenders and consumers.

This recession – downturn – is clearly not as deep as some of the previous ones we’ve all experienced. I think people have been able to manage both on an individual basis and also on the bank level in dealing with customers that are having financial difficulties, said Kiley.

While it’s important to the borrower to let the bank know as soon as a problem arises, it’s also critical for the bank to reach out to the customer, said Kiley, to try to minimize the loss to whatever degree they can.