Montalvo Realty 14585 Big Basin Way, Saratoga, CA 95070
Consumers with loan mods do better with credit cards, auto loans
Consumers who received loan modifications after becoming delinquent on home loans were more likely to avoid delinquencies on other types of consumer loans when compared to homeowners who never obtained mortgage aid, credit bureauTransUnion said Thursday.
TransUnion studied the credit histories of borrowers who were previously more than 120 days delinquent on home loans to see how they handle other types of consumer debt after curing a home loan delinquency.
TransUnion found that borrowers with modified loans were less likely to fall delinquent on new auto loans or credit card debt. Meanwhile, homeowners who never obtained loan modifications were more likely to miss payments after opening new lines of credit or taking out auto loans.
Borrowers that were once at least 120-days past due on a mortgage had a 6.06%, 60-day delinquency rate on new auto loans, compared to an 11.40% delinquency rate for those who never obtained a mortgage modification.
In addition, borrowers who obtained loan mods ended up with a 13.63% delinquency rate on new credit card debts, compared to a 17.13% rate for those who never obtained a modification on their previously delinquent home loans.
"In the 12 months after new loan origination, consumers with a mortgage mod had an average 18% lower delinquency rate on new credit cards than those with no modification, and a nearly 50% lower delinquency rate on new auto loans," concluded Steve Chaouki, group vice president in TransUnion's financial services business unit.