Credit was tight in Colorado in 2008 – fewer loans were made but defaults and delinquencies increased, and even the state’s payday consumer lenders saw less business.
Delinquencies on supervised loans increased 23 percent and the loan defaults doubled compared to the previous year, according to a report from Colorado Attorney General John Suthers.
“Although not unexpected, the increase in defaults is troubling,” Suthers said. “Consumers in financial distress could face repossessions, foreclosures and impaired credit records. More than ever, consumers need to communicate with creditors about their financial situations. Creditors also should consider reasonable work-out plans or loan modifications and engage in responsible lending practices.”
Overall loan volume also decreased 53 percent, due mostly to a 77 percent reduction in mortgage loans. Car loans decreased by 50 percent, the report said.
In addition, the report showed that the number of licensed supervised lenders decreased 40 percent, reflecting the decline in the number of mortgage companies due to lack of money and tighter credit standards. Several lenders became subsidiaries of national banks or federal savings associations, exempt by federal law from state licensing and regulation.
Suthers said the charge-offs or uncollectable payday loans decreased from 4.8 to 4.4 percent in 2008, and lenders made more than $566 million dollars in payday loans, an 11.4 percent decrease in amount lent and a 13.1 percent decrease in the number of loans.