“Ten days ago, the Office of the Comptroller of the Currency published some frightening figures about the looming payments. In its spring 2012 “Semiannual Risk Perspective,” it said that almost 60 percent of all home equity line balances would start requiring payments of both principal and interest between 2014 and 2017.”
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Here Comes the Catch in Home Equity Loans
IS the housing market finally coming back from the dead?
Recent data suggests as much. New homes are being built again. Sales of existing ones are rising — up nearly 10 percent in May from the same month of 2011. Also in May, pending home sales, a figure based on signed purchase contracts, matched their highest levels in two years. Gains were seen across the nation.
After so many years of declines, these signs of life in housing are surely welcome. But the fact is, even a strong recovery is unlikely to rescue many homeowners who are groaning under the weight of multiple mortgages.
That’s because of the nature of home equity lines of credit, which require low payments in the early years followed by hefty payments later on. For many borrowers, those later years are fast approaching.
During the initial years of home equity credit lines, borrowers must pay only interest. Borrowers can also pay down principal if they wish, but many homeowners, short on cash, haven’t done so. At Wells Fargo, for example, in the quarter ended March 31, some 44 percent of the bank’s home equity borrowers paid only the minimum amount due.
Rest here…
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It would seem logical that modification of the first lien HAS to wipe (automatically) out the second lien. And of course, not by itself. I see it as a few-step process: both lenders/servicers/groups of investors (or the same one in some cases) mutually agree on wiping out the second lien, then get approval from the Treasury, then finalize the modification on the first. Or the second lender may negotiate with the borrower for “short pay-off (10-30%) and closure” of the second lien. Whatever way the parties choose, it should be a constructive way with a vision of tomorrow’s issues if it is not done today.
What about the so called HELOC’s that were issued under America’s Wholesale Lender? The 1st sham note/deed of trust also under America’s Wholesale Lender which was sold on Wall Street under CWABS 2007-2. The so called HELOC that Bank of America and their attorney’s state they do not have to show proof of the loan. Are these so called HELOC’s hiding under rocks somewhere because they have definitely been separated somewhere down the road with all of the mortgage fraud. I feel the bank should have to produce where America’s Wholesale Lender ever lended the funds in the first place.
Quite frankly I believe this is another mess that will be uncovered as we fight for foreclosure fraud.