- Mike Ochs
- Related Posts:
Home Equity Loan Delinquencies Spiral as Values Contract
Home equity loan delinquencies reached a record high of 3.52 percent during the first quarter of 2009, according to the American Bankers Association. That contrasts with the 3.03 percent reported during the fourth quarter of 2008. Late payments on loans climbed to a record 1.89 percent.
Home equity loans also are partly to blame for the current credit crisis. Cheap credit set off a housing boom in the early 2000s. Fast-rising house prices spurred homeowners to take out home equity loans – in effect, using their residences as ATMs – to pay for improvements, new cars and a list of discretionary purchases.
The U.S. residential real estate market lost $2.4 trillion in value last year, according to First American CoreLogic. The Mortgage Bankers Association notes that seasonally adjusted numbers of mortgage delinquencies increased by 7.88 percent in the fourth quarter of 2008, the highest recorded numbers since 1972.