Auto lenders such as Ally Financial, General Motors Financial and Mitsubishi Motors Credit of America are pursuing prospective borrowers who have missed payments on their mortgages but may still be good credit risks, the Wall Street Journal reported.
In the first three quarters of 2011, they issued approximately 205,000 loans to borrowers who had at one point been at least 60 days past due on their mortgage, an increase from roughly 80,000 in 2006, according to data from credit bureau Experian.
Lenders “are coming to the table and saying: ‘How do we work with the new economy and consumers being late on their mortgages?'” said Michele Raneri, vice president at Experian. “They know they need to grow…and they know they have to be flexible.”
Steven Bowman, chief credit and risk officer of General Motors Financial, said that mortgage delinquencies are no longer the red flag for lenders that they used to be.
“Before the last recession,” he said, “a mortgage delinquency was considered an early warning sign that bad things would happen. [Now] we think there are some opportunities for good, profitable growth.” [WSJ]