Last week we posted about the 3.3 million HELOC’s that were schedule to reset over the next few years. Now we’re starting to see some of the data come in about those lines of credit. According to a recent article on Realtor.com (which was also in the WSJ) the bill is coming due for many of those homeowners with payments increasing by hundreds of dollars per month due to these resets. Interestingly, some banks have started taking additional steps to lessen risk by no longer permitting interest-only payments on new HELOC’s.
“While delinquencies for Helocs are rising, charge-offs are also up. Lenders wrote off 1.4% of defaulted balances from 2006 Helocs so far this year, up slightly from a year prior, according to Equifax.”
“Heloc delinquencies are unlikely to spur broader banking problems. It is generally harder to foreclose on a home, for example, if borrowers are paying their primary mortgage on time. Heloc balances, while rising, are small—averaging $55,400 for those resetting this year—compared with regular mortgages.”
Click here to read “Home Equity Loans Come Back to Haunt Borrowers, Banks” on Realtor.com
Click here to read “3.3 Million HELOC’s Scheduled to Reset,” on REI2Day
