The Foreclosure Process is Longer for Credit Unions

Anthony Parker on Foreclosure Homes

A report from the National Credit Union Association (NCUA) and credit union executives said that it usually takes longer time for credit unions to complete the foreclosure process. The report also pointed out that foreclosures accounted for a small portion of the total mortgage loans handled by credit unions compared with other financial institutions.

Nationwide foreclosure data showed that the number of foreclosed properties rose by 7 percent in July compared with June and 32 percent higher compared with the same period last year. Among states with high foreclosure rates are Arizona, California, Florida and Nevada. Catching up on the top 10 list are the states of Colorado, Georgia, Illinois and Oregon.

According to industry analysts, July was the third time within five months that the country had experienced a record level foreclosure activity. They noted that the rise in foreclosures occurred despite the efforts of both federal and state governments to help distressed homeowners save their properties from foreclosures. Most notable were the growth in the number of initial default notices and bank repossessions.

The delinquency ratio of fixed-rate loans and hybrid first mortgages by federally-insured credit unions was 0.9 percent in March while ratio for the adjustable-rate first loans that were delinquent for at least two months was 2.18 percent.

According to industry experts, the figures indicated that the mortgage loan rate of credit unions that went into foreclosure was low compared with the overall foreclosure and housing numbers. However, credit union executives said that despite the low figures compared with other financial institutions’ foreclosure rate, the fact still remains that repossession rates for credit unions are at historic highs.

On the other hand, experts noted that lenders are slow to foreclose on distressed properties when housing values and prices are low. They added that if this is the case, lenders prefer to hold off making foreclosures. They would only resume a fast pace foreclosure activity if the market starts to grow again to allow foreclosure properties to return to profitable conditions.

According to credit union executives, majority of the problems of the institutions involved troubled loans from members who withdrew from the service and afterwards, lost their private jobs due to the economic downturn.