Mortgage Delinquencies Still Climbing for Subprime Borrowers: Equifax
Delinquency rates for prime and subprime mortgages increased nearly every month since March of 2009, according to Equifax’s consumer credit trends for August 2009, at least when the borrowers of those loan products are classified as sub-prime borrowers. In August, 30-day plus unit delinquencies for prime mortgages jumped to 6.51% from 5.89% in March, and the 30-day plus unit delinquencies of sub-prime mortgages increased to 36.35% in August from 33.61% in March, according to the report. The dollar rates for prime 30-plus day delinquencies bumped to 7.58%, up from 6.98% in March, and the dollar rates for sub-prime 30-plus day delinquencies rose to 36.35% from 33.61% in March. Growing balances on existing accounts or new account origination offsets increasing delinquent balances, according to the report. Compared to last year, the rate of growth for delinquent borrowers is lower for home equity revolving and mortgage. The definition of prime and sub-prime mortgages for this data set refers to the credit score of the borrower, not the type of loan originated, a spokesperson for Equifax said. Borrowers with an Equifax credit score below 620 are considered sub-prime. Those above 620 are considered prime. Definitions of “sub-prime” continue to vary from one source to the next, or, in some cases, from one state to the next. A bill that takes effect Oct. 1, 2009 in Connecticut defines a “nonprime home loan” as any loan or extended line of credit for the primary use personal family or household purposes. The principal amount of the loan cannot exceed $417,000 for loans originated after July 1, 2008 and before July 1, 2009. Write to Jon Prior.