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But the numbers are nonetheless worrisome, said Rachel Bell, a director of analytics in FICO's global scoring solutions business, because they mark the first time the mortgage default rate for this category of borrowers exceeded credit card defaults.
One category of borrowers likely to benefit from the streamlined program includes those who fell behind because of "a big interruption in income or some unexpected expense, and but for the arrears, they're back on track," she said.
The largest category of borrowers slated to get money are the more than half a million homeowners who were deprived of a loan modification or other loss mitigation assistance.
New Delhi requires banks to devote 40% of the money they lend to a category of borrowers that includes small enterprises, with about half of that going to rural outfits.
According to bxblue co-founder and CEO Gustavo Gorenstein, about 20percentt of Brazilians fall into this category of borrowers, and they take out more than $40 billion in personal loans each year.
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Regulators will then decide how much money to pay each category of borrower.
He belongs to the category of borrower hardest hit by the decline of the forint: ordinary citizens whose income is entirely in local currency.
Governments have to direct the amount of capital banks hold, regulate how much is lent to which category of borrower, cap the multiples of a homebuyer's income that can be lent against and what proportion loans should represent of a home's value.
Private-sector banks must ensure that 25% of their loans are directed towards these priority sectors, while state-owned banks must direct 40% of loans towards these categories of borrowers.
Boucher et al. (2009) found five categories of borrowers in credit market: a) unconstrained borrowers or price rationed borrowers, b) unconstrained non-borrowers or price rationed non-borrowers, c) quantity rationed borrowers, d) risk rationed borrowers, and e) transaction cost rationed borrowers Table 1.
Going into subprime categories of borrower would mean too much risk for Lending Club's retail investors, he says.
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