The Rio Grande Valley has managed to avoid the worst of the now 14-month-old subprime credit crisis.

A subprime loan is typified by adjustable interest rates or generally high interest rates. The loans are usually given to people who couldn't otherwise afford a mortgage or people who want a bigger loan than they would normally be able to get.

When the interest rates reset to higher levels, mortgage holders could not afford the new more expensive payments and lost their houses. The sudden glut of homes on the market caused housing prices to fall, so homeowners suddenly owed more on their property than the properties were worth.

The firms holding those bad loans were left to eat the loss when the borrowers defaulted.

Despite high levels of subprime loans that approached 27 percent of all loans in Hidalgo County and 22 percent in Cameron County, property value did not dramatically fall and Valley property owners have not defaulted on their mortgages in large numbers.

Still, recent signs suggest a dent in the traditionally strong Valley economy. In August, foreclosures continued to rise in Hidalgo County, the average home price continued to fall and new residential building permit filings declined, according to experts and a report from the California-based RealtyTrac.

Home prices, however, have not fallen that drastically and they were never that high to begin with.

"Property values, although they have fallen some ... it doesn't compare to the declines in values in other parts of the country," Alberto Davila, the chair of the Economics and Finance department at the University of Texas-Pan American. "I think we're in fairly good shape here."

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Sean Gaffney covers business and general assignments for The Monitor. He can be reached at (956) 683-4434.