Delinquent Nation: Late Payments Soar

Late payments on a cluster of consumer loans, including those for autos, home improvement and certain home equity loans, climbed in the summer to their highest point since the country's last recession in 2001.

The American Bankers Association reported Thursday that the delinquency rate on a composite of consumer loans increased to 2.44 percent in the July-to-September quarter. That was up sharply from 2.27 percent in the previous quarter and was the highest late-payment rate since the second quarter of 2001, when the economy was suffering through a recession.

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.

Late payments on credit cards, meanwhile, dipped during summer.

The delinquency rate on credit cards dropped to 4.18 percent in the third quarter, down from 4.39 percent in the second quarter.

The association's quarterly survey of consumer loans painted a mixed picture of how people are managing their debt. It suggested that some people feel more squeezed than others.

A severe housing slump and weaker home values have clobbered some homeowners — making it difficult, or even impossible for some to pay their monthly mortgages. Foreclosures surged to record highs and more homeowners fell behind on their payments during the third quarter of last year, the Mortgage Bankers Association reported last month.

A drop in home prices left some people stuck with balances on their home mortgages that eclipsed the worth of their home. Others got burned when low introductory rates on their mortgages jumped to much higher rates, which they couldn't afford.

"Consumer loans directly related to the housing market were hit the hardest," said James Chessen, chief economist at the American Bankers Association. "We anticipate delinquency rates will continue to rise on these types of loans in the fourth quarter of 2007, reflecting continued weakness in the housing sector."

Late payments on home equity lines of credit jumped to 0.84 percent in the third quarter. That was up from 0.77 percent in the second quarter and was the highest since the final quarter of 1997. The delinquency rate on home-equity loans in the third quarter rose to 2.28 percent, a two-year high.

Meanwhile, the delinquency rate on "indirect" auto loans — which are arranged through dealerships — jumped in the third quarter to 2.86 percent, a 16-year high.

Asked why credit card late payments waned while delinquencies on other types of consumer loans waxed, Greg McBride, senior financial analyst for Bankrate.com, said: "Credit cards have more payment flexibility than installment debt such as auto loans and home equity loans," McBride said. "When times are tough, consumers can skate by on the minimum payment on the credit card, but the $500 car payment is still a $500 car payment."

Given all the troubles in the housing and mortgage markets, some distressed homeowners may need their credit card more than ever, McBride said. "The credit card is the line of credit that is going to put food on the table and pay for other day-to-day necessities," he said.

[tucano2]

The worst spendthrift in the nation is GW Bush, who never had an honest job in his life, and continues to spend money like the drunk that he still is. Bush doesn''t need a line-item veto of the Budget. He can, and should, issue Executive Orders to cancel all the Pork, currently called something else, he and members of congress simply call in to have included in a Deprtment''s spending (Agassi''s $200,000 for a tennis court!) as well as have written into the compromise over the Budget (of course it''s not in the Budget itself, but rather in a seperate document the President, if he wasn''t a tin-horn flannel mouthed wimp, would cancel out.

[prairiefox1]

I HAVE ALL BILLS PAID OFF AND SAVING AS MUCH AS I CAN FOR THE FORTH COMING DEPRESSION! THE REASON I SAY DEPRESSION IS THE FACT THAT THE GREEDY WILL NOT REDUCE THEIR PRICES AND BECAUSE OF THAT THE ECONOMY WILL NOSE DIVE! I THINK I WILL BUY GOLD, PLATINUM AND SILVER!

[jetranger7]

Well Sprint / Nextel has layed off 5000 -people in just 1 city this year at their corp-headquarters, MayTag company closed down and layed off their employeees and moved to Mexico, Mack Trucks in Kentucky layed off 480 workers at its plant 1 year ago, I know of 2 trucking companies who went out of business, and just yesterday Yellow freight is now saying that they''ll have to take an $ 800-Million Dollar loss, I know of several car dealerships closed down, 3 mechanic shops out of business, 1 motorcycle dealer, a bar restraunt, 1 huge computer retailer nationwide out of business (COMP-USA), they recently Closed all their stores nationwide,, No were not in a recession laying off multi-millions of American Workers, especially to the Phony BUSH Supporters,,,and their phony rhetoric spew,, more like an economic Depression !!!!

[dennisd29]

Most of the people I know in trouble have refinanced their homes. I know several who did that, took trips to Europe bought that new luxury car or invested in a second house. Now the money is gone the mortgages are higher and they are crying the blues. I find it hard to feel sorry for them, they were stupid.

[g-gfather]

ANY ECONOMY BASED ON EVER INCREASING LEVELS OF CONSUMPTION FOR SURVIVAL, IS FATALLY FLAWED!!!
GUILTY OF GREED AND GLUTTONY,WE DROWN IN OUR OWN EXCREMENT. THE SOUND YOU HEAR IS THE FLUSH OF THE THIS KIND OF ECONOMY AS WE STRUGGLE TO KEEP FROM GOING DOWN!! BYE-BYE. Great-Grandfather.

[micma-2009]

No worries. The trickle in Bush''s trickle down economics plan is on it''s way. If, when it reaches you, it looks and smells like urine, that''s because it is.

[jetranger7]

Well NO- S-H-I-T !!! When you have as many AMERICAN Jobs that have been outsourced to other 3rd World Countries, and AMERICAN Jobs, that have been SHIPPED overseas, within the last 5 to 10 years like we''ve seen, only to be replaced with Low-Wage - NO Benefit Part-Time Service orientated Jobs, what the hell did they think would eventually happen !!!!!! Duhhhhhh !!! We have MORONS in Washington and Corporate America from both parties and they could really careless, because "Corrupt" Corporate America, is lining their pockets and selling AMERICANS down the drain !!!!!! BOYCOTT anything made from CHINA - MEXICO - INDIA - INDIONESIA - SRI LANKA ETC

[payasyougo]

"Given all the troubles in the housing and mortgage markets, some distressed homeowners may need their credit card more than ever, McBride said. "The credit card is the line of credit that is going to put food on the table and pay for other day-to-day necessities," he said. "

Dumb suggestion.

"A severe housing slump and weaker home values have clobbered some homeowners %u2014 making it difficult, or even impossible for some to pay their monthly mortgages."

Ridiculous. Change in home value has no affect on payments. It does affect mentally thinking you are paying for something that is losing value. In that case, try to remember every car you ever bought...

pay for food by giving up cable, internet, parents dining out, etc. Just ask your grandparents what they did.