Home Equity Loans – Not so easy anymore!
Home Equity Loans are just not so easy for homeowners anymore
Originally Published by Adrain Sainz of the Associated Press
Hocking the house for quick cash is a lot harder than it used to be, and it’s causing headaches for homeowners, banks and the economy.
During the housing boom, millions of people borrowed against the value of their homes to remodel kitchens, finish basements, pay off credit cards, buy TVs or cars, and finance educations. Banks encouraged the borrowing, touting in ads how easy it is to unlock the cash in their homes to “live richly” and “seize your someday.”
Now, the days of tapping a house for easy money have gone the way of soaring home prices. A quarter of all homeowners are ineligible for home equity loans because they owe more on their mortgage than what the house is worth. Those who have equity in their homes are finding banks far more stingy. Many with home-equity loans are seeing their credit limits reduced dramatically.
Report says homeowners whose loan payments are cut by 20 percent or more still falling behind
The following is a recent story that was published in the Fort Lauderdale Sun-Sentinel which talks about the recent studies that were released in a recent Government study which state that upwards of 40% of homeowners who recently had their mortgage payments cut by 20% or more found themselves back into default or delinquency within the next 12 months. The article references the recent Obama plan to assist homeowner’s in getting their mortgage payments reduced but since that plan has only really been in effect for less than 6 months I personally find it hard to understand how the study could even be talking about borrowers who had their mortgages reduced in the Obama plan since all of them must have had their mortgages reduced prior to the plan going into effect. Additionally (like many recent news reports) the story fails to address the issue of the lenders not fully converting the temporary modifications that have been offered to so many people, into permanent modifications that reduce payments and perhaps reduce total amount owed. To find out more on how to avoid foreclosure or to negotiate a Short Sale please contact the Burgess Law Firm to request a consultation. (read more below)