HELOCs are now going down!

It’s Christmas time and more presents.
HELOC’s are now defaulting at record
numbers (at least they are now being
reported which they weren’t before – so
who knows really how long they’ve been
in default) and the holders of those notes
will be taking BIGGER and BETTER
short sales, OK shorter short sales!

$21 Billion Dollars (yes, I know, it’s redundant)
have payments that are past due!

Ouch! That’s 2.94% of home-equity loans have defaulted
vs. 5.96% of traditional mortgages and the losses will
be greater than traditional mortgages.

Why is the Loss Greater?

HELOC’sare usually in 2nd position. If you have ever
worked on a short sale (and if you haven’t you need
to check me out at www.shortsalequeen.com ) you
know 2nd position lien holders get slim picken’s when
it comes to getting money out of the deal in a short
sale.

Yes, they can go after the homeowner but besides
being obnoxious, rude and a pain in the …. to the homeowner
how successful do you think that action is in today’s 10+%
unemployment market?

HELOC’s were taken out because there was still equity
in the property anyway. With the drop in value of real estate
all across the country – there is no equity – when the
homeowner goes to sell their house even paying the
first mortgage in full, there isn’t enough money left to pay
the 2nd or HELOC in full. They have to take a short sale to get
the house sold, even if the homeowner/seller hasn’t
defaulted yet.

These reports are saying these HELOC’s are already
in default! according to real estate data company
First American CoreLogic.

Recovery rates on HELOC’s that have gone bad in the
past…during the real estate boom…was 40%. The mortgage-
servicer Clayton Holdings says that figures is now near -0-!
ZERO – Short Sales, Short Sales, Short Sales.

And just an aside. From my personal experience corner (I hate these)
Have you gotten the notice for either CitiBank or BOA
saying your interest rate was going up?

Mine went up to 29.96% monthly. I’ve had no late payments
or over the limit charges. Just increasing to a straight
29.96% monthly
on any and all new charges. Just because they can, I
guess. I couldn’t believe it.

They said they had to change their policy so they could
still make money. Even the girl I was talking to said
they were increasing her interest rate too. I think 30%
on credit cards is considered usury. So they missed
usury by a slim margin!

I canceled my account. I don’t need to send their kids
to college.

Why Banks are robbing us on new,
increased interest rate

And now I know why. Hopefully you are still reading my
ramblings. Apparently in February 2010 the banks
won’t be able to charge fees to card customers for
exceeding credit limits or missing a single payment. They
will need the customer’s permission to cover bounced
checks.

Things are changing in the world of finance. Stay
tuned. There will be more to come.

In the meantime – look for homeowners who need
your solutions! And a short sale is a great solution!

Deb McMillan
The Short Sale Queen®
www.shortsalequeen.com for the BEST coaching in the
country!