Mortgage defaulters not necessarily credit risks

A new study by credit bureau TransUnion revealed that consumers who only defaulted on their mortgage during the economic recession were far better risks than those consumers who went delinquent on multiple credit accounts, such as credit cards and auto loans.

“This new market segment that the recession created is an important one for lenders to understand,” said Steve Chaouki, group vice president in TransUnion’s financial services business unit. “They have the potential, today, to be stronger and more reliable customers.”

The study did not find any strong evidence supporting the widely accepted “excess liquidity theory,” which suggests consumers who stopped paying their mortgage loans during the recent recession had an increased cash flow in the short term, and therefore could repay other debts.