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The world of credit: The 10 commandments of credit

National Mortgage Professional
Jan 04, 2006

BenchMark finalizes results for CBA's 19th Annual Home Equity Lending StudyMortgagePress.comBenchMark Consulting International,Home Equity Lending Study BenchMark Consulting International (BCI), an Atlanta-based management consulting firm to the financial services industry, has finalized the results of the 2005 Consumer Bankers Association's (CBA's) Home Equity Lending Study. The study includes detailed findings in home equity portfolio and booking activity, product characteristics, pricing, marketing activities, sourcing channels, underwriting attributes, portfolio management attributes and delinquencies/charge-offs. Conducted by CBA in conjunction with BCI, the 2005 report included 39 participating home equity lenders, an increase of more than 50 percent from last year's study. Surveys were submitted in the third quarter of 2005 and data collection focused on the twelve months prior to June 30. Findings showed that while home equity growth is still on the rise, respondents reported lower average growth percentages than in previous years. According to Brian King, BCI's consumer lending and mortgage banking practices manager, "While not as brisk as in the previous two years, overall home equity portfolio growth continues on a double-digit pace according to the data, and home equity line growth is 25 percent." Findings indicated that institutions' appetites for risk continue to expand. Eighty-eight percent of this year's study population originated C- or D-rated credits (defined as having a FICO score of less than 630). Among respondents who originated sub-prime credits, these credits represented an average of six percent of new line accounts and 11 percent of new loan accounts. Supporting the branch-building trend of recent years, the study indicated that retail branches continued to be the primary channel of home equity lines and loans. The study also provides detail on other channels, direct mail and Internet marketing, as well as cross-sell activities. For more information, visit www.cbanet.org.
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