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» VISIT US ONLINE @ DSNEWS.COM 27 ESTABLISHING CREDIT HISTORY HARDER IN LOW- INCOME AREAS Consumers in lower-income parts of the country are more likely to establish credit history through negative means, like debt collection or public records, according to a recent study from the Consumer Financial Protection Bureau. e study found that consumers in higher-income areas more commonly establish credit with a credit card or through co-borrowing. According to CFPB Director Richard Cordray, the study shows that those in lower-income areas are at a financial disadvantage very early on. "It is no secret that lower-income consumers face challenges in the financial marketplace," Cordray said. "Today's study shows that even at the beginning of their financial lives, they are faced with higher hurdles to gain access to credit, which hinders them from turning their version of the American dream into reality." e study found that nearly 80 percent of Americans establish credit history before the age of 25, most commonly with credit cards. Consumers in higher-income parts of the country were 30 percent more likely to use credit cards to these means than those in lower-income areas. While 44 percent of high-income area consumers established credit through a card, just 34 percent of those in lower-income regions did. Low income area consumers are also 240 percent more likely to establish credit history through negative records. About 27 percent of these consumers establish their histories through what the CFPB calls "nonloans," including debts in collection or public records. Only 7.9 percent of consumers in high-income areas establish credit via nonloans. High-income area consumers are 100 percent more likely to rely on a co-borrower to establish credit history. Only about 15 percent of low income area consumers establish credit through these means. Additionally, the CFPB found that the percentage of consumers who establish credit history via student loans has doubled over the last decade. More than 26 percent of consumers now use student loans when establishing their credit history. e CFPB estimates that 11 percent of all U.S. adults—about 26 million—are "credit invisible," meaning they have no credit history with Experian, TransUnion, or Equifax. Without a history, these consumers are at a disadvantage when it comes to lending. "Without a sufficient credit history, consumers face barriers to accessing credit or higher costs," the CFPB reported. "is issue disproportionately impacts consumers who are African-American or Hispanic, and people who live in low-income neighborhoods. It can also impact some recent immigrants, young people just getting started, and people who are recently widowed or divorced." FORECLOSURE VOLUME HITS 10-YEAR LOW e total national loan delinquency rate (loans 30 or more days past due, but not in foreclosure), spiked 13 percent from March to April, putting a little over 2 million properties past due, according to the recent First Look report issued by Black Knight Financial Services. According to Black Knight, the rise is primarily due to timing. Due to the month ending on a Sunday, servicers were unable to process payments the last two days of the month. Typically, for this reason, all months ending on a Sunday cause a spike in delinquencies. Additionally, March is known to be the calendar year low point for mortgage delinquencies, triggering a rise coming into April. Past-due mortgage accounts went up by roughly 241,000 from March. However, 227,000 of those were early-stage delinquen- cies, meaning they were 30 days past due. Based on previous months that follow a Sun- day ending, May should be a near, but likely not complete, reversal in April's delinquencies. Active foreclosures are continuing to fall, hitting a 10-year low of 433,000. Similarly, at 52,800, monthly foreclosure stops were the fewest since January 2005. Prepay speeds, typically a good indicator of refinance activity, fell by 11 percent from March. Properties 90 days or more past due but not in foreclosure were down 8,000 at 581,000, properties in foreclosure presale inventory were down 15,000 to 433,000, and properties 30 days past due or in foreclosure were up 227,000 at 2.5 million. By state, Mississippi continues to hold the highest number of delinquent loans at 3.16 percent over 90 days past due. Mississippi is followed by Louisiana, Alabama, Arkansas, and Tennessee.

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