Equifax: Mortgage delinquencies slide as demand rises for revolving home equity lines

Lenders in the housing market have been forced to proceed with caution when evaluating credit applicants in this volatile sector. The new realities of the housing market have encouraged corporate investments in sophisticated loan origination software, among other types of technology, to empower lenders' ability to analyze creditworthiness.

At the same time, a recent report suggests improving conditions that favor housing lenders. Equifax released its National Consumer Credit Trends Report for October, which showed falling delinquency rates and rising demand for home equity lines of credit – both signs of the improved financial stability of existing mortgage holders, according to the report.

New revolving home equity lines of credit was valued at $44 billion for the first seven months of 2012, a 9 percent increase from the same time period one year earlier, Equifax reported. In addition, the total balance of severely delinquent mortgages nationwide was $419 billion through September 2012, a 44 percent decrease from peak levels in March 2010.

What the numbers mean for mortgage lenders

"Increasing new home equity revolving credit indicates homeowner confidence and momentum towards an improved market," said Craig Crabtree, an Equifax executive who added that the market is enjoying "consistent growth."

Such improvements present an opportunity to lenders that are able to evaluate existing loan portfolios and seek out prospective cross-sell possibilities or risky circumstances that require proactive attention. Delinquencies may be falling in a broader sense, but it still benefits lenders to search for and identify clients that may present a threat to the financial stability of the greater loan portfolio.

With sophisticated case management software, mortgage providers will enjoy improved visibility into their loan portfolios, enabling professionals to identify potentially problematic clients and take action to lessen their possible risk.

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