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Consumer loan delinquencies decline again in fourth quarter

In a positive sign for the economy, a bankers group said Wednesday that delinquencies on consumer loans declined in the last three months of 2009, marking the second consecutive quarter of improvement, and a sampling of data suggests the trend has continued this year.

Delinquencies fell in eight of 11 consumer loan categories in the fourth quarter, including credit cards and loans for cars, boats and recreational vehicles, the American Bankers Assn. said. The survey considered a loan delinquent if at least one payment had been missed.

Delinquencies on home equity lines of credit fell for the first time in six quar- ters to 2.04% of all accounts, from 2.12% in the third quarter, the bankers group reported.

“This first sign of improvement has been a long time coming and is finally some positive indication that the housing market is stabilizing,” the chief economist for the American Bankers Assn., James Chessen, said in a statement.

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But delinquencies on home equity loans -- which differ from lines of credit because borrowers can’t withdraw more money once the loan has been made -- edged up to 4.32%, a fresh record high, from 4.3%.

A sampling of consumer files by credit tracker Equifax indicates that delinquency rates fell for all household borrowings in the first quarter, including first mortgages and home equity loans, said Mark Zandi, chief economist for Moody’s Analytics.

“Households are making progress repairing their tattered balance sheets,” Zandi said in an e-mail. “Tighter underwriting standards, falling debt service burdens, and a more stable job market are all helping.”

The banking group said the average delinquency rate across eight installment loan categories, excluding home-equity credit lines and credit cards, fell to 3.19% from 3.23%.

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Bank card delinquencies fell to 4.39% from 4.77%, dropping below the five-year average of 4.52%.

Chessen called the data a strong indication that the economy was on the upswing.

“Clearly, consumers are shoring up their finances and banks are putting losses behind them. Overall, there is a prudent approach to credit,” he said.

scott.reckard@latimes.com

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