Home equity loan defaults on the rise in US
Home equity loan default rate rises. With home values dropping in US, home owners see less available emergency or investment funds available to them.
Homeowners have readily turned to their built up equity to do everything from remodel to take a vacation and even to invest with. Unfortunately, home equity loans are not seeing larger default rates than ever.
More so, with home values dropping in the US, equity is eaten up, allowing many who would count on this nest egg to find themselves without that possibility.
As Countrywide Financial Corp released its earnings the last week of January, buried within was some $32.4 billion portfolio of prime home equity lines of credit, or HELOC's that is dropping, rapidly. Some $704 million worth of a charge was forced because homeowners just did not have the ability to repay these loans any longer.
At the same time, the US is facing foreclosures head on. Many who are critical of the US economic stimulus package due to be voted on Monday, fear that the US is not doing enough to look at the reasons behind, preventions of and the overall getting over the foreclosure market. Many economists believe that it is the housing market pushing the country into recession.
As reported in Financial Times, Christopher Dodd who is on the Senate Banking Committee, said, "To the extent this economic crisis has a face: its housing. And to the extent there's a face o the housing crisis, it's the foreclosure crisis."
On all turns, the foreclosures of properties in the US have cost many banks billions of dollars around the globe.