Mortgage delinquencies dropped unexpectedly during the fourth quarter last year, while the rate of foreclosures also posted a decline, the Mortgage Bankers Association said.

A drop in mortgage delinquencies is unusual during a recession and could signal that the worst may be over for the nation's beleaguered real estate industry."It would not have been surprising to see increases in these categories rather than decreases," said James Nelson, the association's president.

"The declines were especially encouraging in the context of economic events in the fourth quarter," Nelson said.

"The problems that have plagued the economy in recent months - rising unemployment, slow income growth, sluggish home price appreciation and high consumer debt loads - continued and even worsened in the fourth quarter."

During the latest quarter, the delinquency rate for mortgages 30 or more days past due fell to 4.71 percent from 5 percent in the third quarter. Although most of the decline was concentrated in the least serious 30-day category, fewer delinquencies in the 60- and 90-day past due categories were also seen.

Similarly, the rate of new loans entering foreclosure declined to 0.29 percent in the fourth quarter from 0.33 percent in the previous three months.

But the percent of loans in the foreclosure process increased slightly to 0.94 percent from 0.93 percent in the third quarter.

The association said it would not be surprising to see the percentage of loans in the foreclosure process rise again in the first quarter as a result of rising unemployment.

By region, delinquency rates rose in the Northeast - mired in recession longer than much of the rest of the nation - but fell in all other parts of the country.

In the Northeast, delinquency rates rose to 4.99 percent from 4.79 percent in the year-earlier quarter. Foreclosures also rose, to 0.97 percent from 0.71 percent.

In the North Central region, delinquencies fell to 5.16 percent from 5.64 percent the year before. Foreclosures fell to 0.91 percent from 1 percent the year before.

In the South, the delinquency rate fell to 6.04 percent from 6.17 percent the year before, and foreclosures remained unchanged at 1.13 percent.

In the West, delinquencies fell to 4.14 percent from 4.50 percent the year before, and foreclosures dropped to 0.74 percent from 0.99 percent.