Late payments on HEL loans.

[Coronita]

Looks like we’re starting to see late payments rise on the HEL(L) loans. Looks like those folks that took out equity to paying of their credit card debt are taking some heat.

http://biz.yahoo.com/ap/070703/late_loans.html?.v=4

WASHINGTON (AP) — Late payments on home equity loans climbed to a 1 1/2-year high in the opening quarter of this year, while delinquencies on credit card bills fell, painting a mixed picture of how people are managing their debt.

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The American Bankers Association, in its quarterly survey of consumer loans, reported Tuesday that late payments on home equity loans rose to 2.15 percent in the January-to-March quarter. That was up sharply from 1.92 percent in the final quarter of last year and was the highest since the late summer of 2005.

“There are still signs of consumer financial distress, which will continue throughout most of this year as the worst of the housing problem works its way through the economy,” said James Chessen, the association’s chief economist.

Payments are considered delinquent if they are 30 or more days past due. The survey is based on information supplied by more than 300 banks nationwide.

The survey also showed that the delinquency rate on a composite of other types of consumer loans, including those for autos and boats, home improvement and for certain home equity loans, increased to 2.42 percent in the first quarter. That was up from the fourth quarter’s 2.23 percent delinquency rate and was the highest since the second quarter of 2001, when the economy was in a recession. The rise for the composite was driven by home-equity loan delinquencies, Chessen said.

On a brighter note, late payments on credit card bills dropped in the first quarter to 4.41 percent. That was down from 4.56 percent in the fourth quarter and was the best showing in nearly a year.

“The improvement in credit card late payments is somewhat remarkable, given that the economy was not operating on all cylinders,” Chessen said.

The economy barely budged in the first quarter, growing at a pace of just 0.7 percent, the weakest in more than four years. Fallout related to the housing slump was a main factor behind the feeble showing.

After a five-year boom, the housing market tanked last year. The combination of rising interest rates and falling house prices clobbered some homeowners — especially those with tarnished credit histories and adjustable-rate mortgages. Late payments and new foreclosures for those borrowers spiked to all-time highs in the first quarter, according a separate survey by the Mortgage Bankers Association, released last month.

The American Bankers Association: http://www.aba.com

[SD Transplant]

It seems that the housing market slowdown is taking a toll on other industries – auto industry in this case (which is no surprise). An article on MSN Money today with the title “Repo man is getting busy”

http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/TheRepoManIsGettingBusy.aspx

More vehicle owners are falling behind as the economy slows. Many slip when they lack the money to repair cars that they’re still making payments on.
For the repo man, business is always good. But lately, it’s been better than good.

As the subprime-mortgage collapse blares in the background, “recovery service agents” have been cleaning up the wreckage of another subprime-lending mess: that of the auto industry, which in its own competitive bid for buyers has been extending longer, costlier loans to people unable to keep up with their payments.

One in three auto-loan borrowers have payments greater than $500 a month, according to consumer credit agency Experian, and 12% have been late at least once
In a survey for the National Automotive Finance Association, BenchMark Consulting International said monthly repossessions by subprime lenders increased 15% last year.

Manheim Consulting, which analyzes the used-car market, estimated a 5% increase in the total number of repossessed vehicles to 1.4 million in 2006. The Manheim and Adesa auctions resell most of the vehicles repossessed in the United States.

“The shorthand is that for years we’ve lived beyond our means, reflected in record debt levels, and now comes the paying phase,” said Christian Weller, a senior fellow at the Center for American Progress, a progressive think tank in Washington, D.C. “Car loans have expanded as fast as mortgages, and in terms of the categories of what people borrow for, it is the second-largest.

“It fits the overall picture that all the economic-distress measures are trending upward.”

Repossession agents in areas hit by foreclosures say they’ve been picking up vehicles both from people struggling to keep their homes and from those now left without work: construction workers, pavers, landscapers and real-estate agents.

It is actually stunning the number of cars we’re taking from people who are supporting the local real-estate market,” said J. Patrick Altes, the president of Falcon International, a recovery agency with offices throughout Florida. “It’s almost the type of thing where we see it and you wonder if anyone else sees it. . . . It’s like they turned off the spigot.”

Cracks are showing everywhere:

***BenchMark found a marked rise in long loan terms, which lead to greater negative equity. For subprime lenders, who service consumers with low FICO credit scores at higher interest rates, more than 80% of new-car loans were for 61 to 72 months, up from 67% in 2005.

***Among prime lenders, 61% of new-auto loans were for at least 60 months, with 17% of those exceeding 72 months, nearly double the 9% in 2005. “With longer negative-equity situations, there’s a greater chance the customer’s going to walk away,” said Walter Cunningham, the president of BenchMark.

***For the first time in several years, prime lenders increased the number of loans extended to risky consumers. Those with FICO scores below 600 moved from 4% to 8% for used vehicles and 2% to 6% for new vehicles, BenchMark reported. “They’re moving downscale, and they’re also lending money to the higher-risk players,” Cunningham said.

***Subprime lenders also reached down the credit scale, with 54% of deals made to buyers considered a high or superhigh risk, those with FICO scores under 549, up from 34% in 2005. “All of these are kind of pointing to higher delinquencies and higher charge-offs,” Cunningham said.

***More new cars are being repossessed. According to Manheim, the average mileage of subprime repossessions sold at auction dropped from 80,164 in January 2006 to 75,099 a year later, while the average price rose from $6,359 to $7,066.

Repossession: A unique form of collection
Miss a credit card payment or an electric bill and companies bump down your credit score or cease service. Fail on the mortgage and a judge can issue a foreclosure notice. But skip a car payment or the full insurance and a guy in jeans can hook a chain to your car and tow it away, no court hearing required.

“If you think about it, that’s a pretty drastic remedy,” said Nancy Barron, a consumer lawyer in California who specializes in auto claims.

[SD Transplant]

It seems that the housing market slowdown is taking a toll on other industries – auto industry in this case (which is no surprise). An article on MSN Money today with the title “Repo man is getting busy”

http://articles.moneycentral.msn.com/SavingandDebt/SaveonaCar/TheRepoManIsGettingBusy.aspx

More vehicle owners are falling behind as the economy slows. Many slip when they lack the money to repair cars that they’re still making payments on.
For the repo man, business is always good. But lately, it’s been better than good.

As the subprime-mortgage collapse blares in the background, “recovery service agents” have been cleaning up the wreckage of another subprime-lending mess: that of the auto industry, which in its own competitive bid for buyers has been extending longer, costlier loans to people unable to keep up with their payments.

One in three auto-loan borrowers have payments greater than $500 a month, according to consumer credit agency Experian, and 12% have been late at least once
In a survey for the National Automotive Finance Association, BenchMark Consulting International said monthly repossessions by subprime lenders increased 15% last year.

Manheim Consulting, which analyzes the used-car market, estimated a 5% increase in the total number of repossessed vehicles to 1.4 million in 2006. The Manheim and Adesa auctions resell most of the vehicles repossessed in the United States.

“The shorthand is that for years we’ve lived beyond our means, reflected in record debt levels, and now comes the paying phase,” said Christian Weller, a senior fellow at the Center for American Progress, a progressive think tank in Washington, D.C. “Car loans have expanded as fast as mortgages, and in terms of the categories of what people borrow for, it is the second-largest.

“It fits the overall picture that all the economic-distress measures are trending upward.”

Repossession agents in areas hit by foreclosures say they’ve been picking up vehicles both from people struggling to keep their homes and from those now left without work: construction workers, pavers, landscapers and real-estate agents.

It is actually stunning the number of cars we’re taking from people who are supporting the local real-estate market,” said J. Patrick Altes, the president of Falcon International, a recovery agency with offices throughout Florida. “It’s almost the type of thing where we see it and you wonder if anyone else sees it. . . . It’s like they turned off the spigot.”

Cracks are showing everywhere:

***BenchMark found a marked rise in long loan terms, which lead to greater negative equity. For subprime lenders, who service consumers with low FICO credit scores at higher interest rates, more than 80% of new-car loans were for 61 to 72 months, up from 67% in 2005.

***Among prime lenders, 61% of new-auto loans were for at least 60 months, with 17% of those exceeding 72 months, nearly double the 9% in 2005. “With longer negative-equity situations, there’s a greater chance the customer’s going to walk away,” said Walter Cunningham, the president of BenchMark.

***For the first time in several years, prime lenders increased the number of loans extended to risky consumers. Those with FICO scores below 600 moved from 4% to 8% for used vehicles and 2% to 6% for new vehicles, BenchMark reported. “They’re moving downscale, and they’re also lending money to the higher-risk players,” Cunningham said.

***Subprime lenders also reached down the credit scale, with 54% of deals made to buyers considered a high or superhigh risk, those with FICO scores under 549, up from 34% in 2005. “All of these are kind of pointing to higher delinquencies and higher charge-offs,” Cunningham said.

***More new cars are being repossessed. According to Manheim, the average mileage of subprime repossessions sold at auction dropped from 80,164 in January 2006 to 75,099 a year later, while the average price rose from $6,359 to $7,066.

Repossession: A unique form of collection
Miss a credit card payment or an electric bill and companies bump down your credit score or cease service. Fail on the mortgage and a judge can issue a foreclosure notice. But skip a car payment or the full insurance and a guy in jeans can hook a chain to your car and tow it away, no court hearing required.

“If you think about it, that’s a pretty drastic remedy,” said Nancy Barron, a consumer lawyer in California who specializes in auto claims.

[cr]

I was just reading that article SD R, and I am reminded of the prevailing comments since the acceptance of the downturn, comments from BB like:

“the Fed had not, as yet, seen many spillover effects from the housing slowdown.”

This of course followed months of statements claiming housing was at the bottom. It’s as if everything these guys say is okay, goes down the toilet the following quarter.

The slowdown is speeding up, and “spillover” is looking more like an avalanche. One should be able to get a good deal on a “pre-owned” H2 though.

[cr]

I was just reading that article SD R, and I am reminded of the prevailing comments since the acceptance of the downturn, comments from BB like:

“the Fed had not, as yet, seen many spillover effects from the housing slowdown.”

This of course followed months of statements claiming housing was at the bottom. It’s as if everything these guys say is okay, goes down the toilet the following quarter.

The slowdown is speeding up, and “spillover” is looking more like an avalanche. One should be able to get a good deal on a “pre-owned” H2 though.

[Author]

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