Home Equity Delinquencies, Foreclosures Climb in August

Delinquencies on home equity loans soared in August, according to a new report released by Moody’s Investors Service, which tracks the data as it relates to securitization.

The percentage of home equity loans included in securitized pools that were 60 or more days delinquent rose from 14.17 percent in July to 15.24 percent in August, according to Moody’s “U.S. Home Equity Index Composite: September 2007 Reporting Period.”

Charge-offs of home equity loan-backed pools also climbed, with the composite charge-off rate reaching 3.02 percent in August, up from the July’s reading of 2.68 percent. Foreclosures were up from 5.65 percent in July to 6.25 percent in August. Moody’s considers foreclosures to be a subset of total 60-plus days delinquencies.

Moody’s also noted in the report that loan prepayments had fallen in August. Prepayments generally indicate refinance activity. Moody’s said that prepayments have been trending “downward significantly” in the past year on home equity loans.