Consumers still struggling with loans: ABA

WASHINGTON (Reuters) - U.S. consumers continue to struggle to pay back home equity, auto and other loans as high unemployment drags on the economy.The American Bankers Association said in a report released on Tuesday that the overall loan delinquency rate ticked up slightly for the second straight quarter. It had been dropping steadily since hitting 3.35 percent in the second quarter of 2009.The overall rate increased to 3.01 percent in the third quarter of 2010 from 3.00 in the second quarter.The ABA defines a delinquency as a payment that is 30 days or more overdue.The association attributed the lack of downward movement to the unemployment rate, which remains high, but said delinquency rates are likely to improve soon."The economy just skipped a beat in the third quarter," ABA Chief Economist James Chessen said in a statement. "It doesn't move in a straight line and neither do consumer credit delinquencies."Unemployment numbers have improved slightly since the third quarter, meaning the delinquency rate could start dropping again when numbers for the fourth quarter of 2010 are reported.The unemployment rate in December was 9.4 percent down from 9.8 percent in November.Chessen also argued that a deal between the White House and congressional Republicans over taxes for the next two years could help the economy by providing more certainty about income tax rates."I think we'll see momentum return and delinquencies improve over the next six months," Chessen said.Among the areas where consumers had a more difficult time repaying their debts was in auto loans. The delinquency rate for loans provided by a bank increased from 1.67 percent to 1.74 percent and delinquencies on loans arranged through a dealer or other third party increased from 3.01 percent to 3.02 percent.The delinquency rate on credit cards issued by banks also increased moving to 3.64 percent in the third quarter from 3.62 percent during the previous time period.One area where the delinquency rate dropped was in marine loans for such things as boats. The rate fell from 2.2 percent to 2.04 percent.

Manila Bulletin

Banks take steps to clean up foreclosure process; As errors mount,

An overhaul of lender foreclosure systems is forcing many attorneys to sign code-of-conduct pledges and is leading to dismissals of hundreds of cases.

The details of the internal reforms made by six leading banks are outlined in reports submitted last week to comply with a New Jersey court order.

The hundreds of pages of documents also offer insight as to when the lenders first identified problems, as well as more acknowledgments of "deficient" and "inadequate" practices used to take back homes.

Portions of the reports are specific to New Jersey, such as the 210 foreclosures Citibank dismissed because of errors. The report notes the cases are likely to be refiled, but homeowners also will be given a new chance to modify their loans. Citibank did not respond to a request for Florida-specific information.

Other changes are on a nationwide scale, such as new training classes, the hiring of additional employees, the creation of uniform affidavits to reduce confusion, and Bank of America's new attorney code of conduct.

The code, which must be signed by all outside attorneys used in foreclosure proceedings, was distributed Nov. 30.

It reinforces "ethical obligations" and is accompanied by a new "attorney watch list" program to identify and deal with poorly performing firms.

Shari Olefson, a Fort Lauderdale real estate attorney who represents banks, said she has no problem with lenders being required to divulge their solutions to the foreclosure bungle. But she doesn't believe a mandatory code of conduct will have much effect.

"I guess I'm getting cynical about this whole thing, but if I have to teach you ethics, then why am I letting you be a lawyer?" Olefson said. "There are so many agendas in this, it's difficult for me to take anything seriously."

By Kimberly Miller
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