Profile picture for Aldreth

New York Times - 1.1 Trillion in HELOC bills now coming due.

Equity Loans as Next Round in Credit Crisis

 

"Little by little, millions of Americans surrendered equity in their homes in recent years. Lulled by good times, they borrowed — sometimes heavily — against the roofs over their heads."

 

"Now the bill is coming due. As the housing market spirals downward, home equity loans, which turn home sweet home into cash sweet cash, are becoming the next flash point in the mortgage crisis.

 

Americans owe a staggering $1.1 trillion on home equity loans — and banks are increasingly worried they may not get some of that money back."

 

---Remember you can be pursued for your HELOC amount even after foreclosure. Which will create a bankruptcy boom all by itself.

  • March 28 2008 - US
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Answers (22)

Profile picture for Aldreth
  • March 28 2008
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Profile picture for CORONA NICK

ouchy...

  • March 28 2008
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Profile picture for supercub

Hmmmm, Hummers are Us National Bank of America

  • March 28 2008
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Profile picture for MORTGAGE OPERATOR
The government and banks are working very hard towards these issues and we'll see positive results
  • March 28 2008
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Profile picture for sndral

"It is a remarkable turnabout for the many Americans who have come to regard a home as an A.T.M. with three bedrooms and 1.5 baths. When times were good, they borrowed against their homes to pay for all sorts of things from new cars to college educations to a home theater."

Call me cold, jealous, whatever, but for those who chose to live wildly beyond their means, the time has come to pay the piper and I say hold their feet to the fire.

  • March 28 2008
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Profile picture for MORTGAGE OPERATOR
by punishing them we'll hurt the entire economy ...your own home...and neighborhoods ...if you're a sark waiting to grab free homes...then I see your point..
  • March 28 2008
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Profile picture for CORONA NICK

"dont fire, let them burn"..... Saving Private Ryan...LOL

  • March 28 2008
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What's a sark?

  • March 28 2008
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oh nm shark right?

 

wasn't playing spelling police, it sounded like something.

  • March 28 2008
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Profile picture for Aldreth

I sincerely hope the people with negative equity are adequately prepared.

  • March 28 2008
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Profile picture for MORTGAGE OPERATOR
aldreth, that was a nice sincere comment..
  • March 28 2008
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Profile picture for Aldreth

Are you being facetious Amerisave?

  • March 28 2008
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Profile picture for jal74

Let me take the other side of the argument.

 

Please go here

 

If you do the math, you will see that the citizens of the united states as of that date had an estimated net worth of approx 31 trillion.  Oh by the way - greater than the rest of the world COMBINED

 

Just my 2 cents

  • March 28 2008
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Profile picture for MORTGAGE OPERATOR
aldreth, I really meant what I said...some of those people had good intentions and now they are in trouble where we had price drops ....some took the risk and some were lied to...and your comment was nice...I also hope these people are ready and able to work out a solution
  • March 28 2008
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Profile picture for sunshineday

Sometimes I wish we did have the spelling police.  And the punctuation police.  Is it really so hard to refrain from using an apostrophe when trying to make a noun plural?

  • March 29 2008
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Profile picture for bubblelicious

***The government and banks are working very hard towards these issues and we'll see positive results ***

 

What about personal accountability?  I  am accountable for my actions why should the people who took out the loans be responsible for theirs?  The gov't has screwed up things enough.  Just let the peice fall where they may and get on with things.  But I will miss you all on zillow if that happens because we will have nothing to chat about.

  • March 29 2008
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Profile picture for bubblelicious

should = shouldn't

 

my bad

  • March 29 2008
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Profile picture for BuyEqualsRent

Both the government and the banks are far too extended to do much of anything. 

  • March 29 2008
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Profile picture for sndral

Amerisave wrote "by punishing them we'll hurt the entire economy.." I'm not sure I'd use the word 'punish' - "a penalty for wrong doing." Rather, there are consequences for decisions, choices. The Heloc crowd chose vacations now, new vehicles now, living beyond their means now and not saving for college, retirement whatever.  Well now is yesterday and it comes with a price tag including yesterday's excesses and todays necessities. What I object to is socializing their losses at my expense through taxpayer backed bailouts. But then, I object to a lot of things and freely admit that I am clueless re the macro economic impact of an economy built on credit and unpaid bills, I suspect that this is nothing compared to what we'll see when the social security debacle starts to hit the fan.

Oh, and no, I'm not a shark looking to buy, for me it cuts both ways, I own and am looking to buy a second/weekend home, and if the economy tanks my retirement savings will undoubtedly take a hit, just like they did when the dot.com bubble burst.

  • March 29 2008
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Profile picture for rgoates

Is that a fact that the banks can come after a home owner for the HELOC?? Even AFTER the foreclousure??

  • March 29 2008
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Profile picture for prim2007

I don't know why not.  I'm sure there are some differences depending on whether your HELOC is a 1st mortgage or a 2nd mortgage but these are separate loans with distinct loan terms.  During the last several years HELOCS  have been frequently used to avoid paying any downpayment when purchasing a new home.  The loan officer was fine with this because he/she got rewarded for writing two new loan accounts (they have new business goals to meet).  In this case, the borrower finances 80% of the loan with a 1st mortgage and then they finance the 20% down payment with a home equity line (2nd mortgage).  If the bank forecloses on your 1st mortgage, that wouldn't prevent them from wanting to pursue you on the 2nd one. Interestingly enough, I still see these loans frequently on that show Property Virgins. 

  • March 29 2008
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Profile picture for subwayvigilante

rgoates - in nearly all cases, HELOCs are full-recourse loans (as opposed to primary mortgages, some of which are non-recourse depending on the state).   So even after foreclosure, the bank can come after the borrower.

 

In most cases, the borrower doesn't have any assets to come after, so spending the money getting a deficiency judgement and attaching wages, etc, doesn't give much return to the bank.  But they will often sell the debt to a collection agency who will badger the borrower ad infinitum.

  • March 29 2008
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