The delinquency rate of home equity lines of credit fell for the second consecutive quarter and missed payments on closed-end home equity loans fell in the first quarter for the first time in two years, according to an American Bankers Association survey.

"With job growth creeping back slowly and personal incomes rising a bit, I'm hopeful that improvements in consumer delinquencies will continue," said ABA chief economist James Chessen.

ABA found that 1.81% of HELOCs were 30-days or more past due on a seasonally adjusted basis, down 20 basis points from the fourth quarter. This followed an 8 bp decline from the third quarter of 2009. For closed-end home equity loans, the delinquency rate fell to 4.12% in the first quarter, down 23 bps from the previous quarter.

"Banks are putting losses behind them and following a prudent approach to new loans because the on-again, off-again economy is keeping risk high," Chessen said. However, regulators are "demanding that banks remain cautious," he added.

The Federal Deposit Insurance Corp. found that banks and thrifts have charged off at least $5 billion in HELOCs in each of the past four quarters.

The HELOC net charge-off rate was 3.12% in the first quarter. The net charge-off rate on closed-end home equity loans was 5.6% in the first quarter, down from 6.29% in the prior quarter.

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