FHFA announces 2016 conforming loan limits

FHFA announces 2016 conforming loan limits

Much of U.S. left unchanged; limits increase in 39 ‘high-cost’ counties

Game changer? Quicken Loans takes mortgage lending fully digital

Launches Rocket Mortgage

Google launches mortgage comparison tool with Zillow

LendingTree will also bring mortgages to Google
Lending / The Ticker

Home equity loans pose new risks for banks

/ Print / Reprints /
| Share More
/ Text Size+

Monthly payments on home equity loans are set to rise in about two years, due to the abundance of home equity loans made before the financial crisis and the terms associated with them, an article in the American Banker claims.

Banks face a high financial risk if they do not take the steps needed to identify borrowers who are at risk of falling short on payments.

According to the report, borrowers with a $210,000 mortgage and a $40,000 home equity loan can expect their monthly payments to jump about 26% when principal payments on the home equity loan come due. 

"Most of these [home equity lines of credit] were originated at the height of the crisis between 2005 and 2007 when credit-underwriting standards were dismal," wrote Thuy Nguyen, a Moody's Investors Service analyst. "As such, they are a particular concern."

Source: American Banker
Read full story

Recent Articles by HousingWire Staff

Comments powered by Disqus