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Aug
05

Home Equity Loan Delinquencies Rise

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According to the American Bankers Association report, the number of homeowners thirty days or more behind on their home equity loans or lines of credit hit the highest point seen in over 10 years. The 1st quarter 2008 data suggests that the economic pain being felt by borrower is bleeding over into another segment of consumer credit that in the past had been almost completely resilient in recessions.

Economic Advisors President Joel Naroff explained, “The risk of losing the roof over their heads, homeowners who are financially pinched tend to pay their home mortgages and equity loans before car loans and credit cards, explains “That people are now having trouble making payments on equity loans is a clear sign of the extent of the pressure on the household budgets,” he said in an article published by USA Today. 

The demand for Home Equity Loans remains great, but liquidity since the credit crunch continues to significantly limit the availability of these once popular second mortgages.  Until the mortgage crisis is resolved look for homeowners to use FHA home loans to raise capital through cash out refinancing options, but expect the lending guidelines to tighten even more.

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1 Comments

1

Home equity products are hard to find. Smart Home Equity still offers home equity and refinance products, but borrowers need full documentation and more equity is required. Hopefully the second mortgages will make a comeback in 2009.

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