The composite consumer credit default index tumbled by seven basis points from August to September, driven by substantial declines in both the first and second mortgage default rates, according to S&P Dow Jones Indices and S&P/Experian Consumer Credit Default Indices for September 2015 released Tuesday. The composite default rate, which includes first and second mortgage defaults as well as defaults on bank cards and auto loans, fell from zero point 96 percent in August down to 0 point 89 percent in September and is now only one basis point higher than its historic low of zero point 88 percent reached in May 2015.
The default rates for both first mortgages and second mortgages dropped from August to September, fueling the decline in the composite index. The first mortgage default rate fell by eight basis points down to zero point 76 percent and the second mortgage default rate dropped by 10 basis points down to zero point 47 percent in September. Both rates are close to the historic lows for the first and second mortgage default rates of zero point 74 percent and zero point 42 percent, respectively, both reached in May 2015.
The total amount recovered from litigation against banks that sold toxic residential mortgage-backed securities to corporate credit unions has now reached 2 point 2 billion dollars with two recently announced pending settlements, according to an announcement from the National Credit Union Association, a chief regulator for credit unions in the United States. Wachovia, now owned by Wells Fargo, and Barclays agreed to pay 53 million dollars and 325 million dollars, respectively, to resolve claims from the NCUA of losses suffered by corporate credit unions stemming from the purchase of the faulty securities.