During the housing boom, HELOC lenders regularly offered home equity lines of credit at 90% or even 95% of the borrower’s home value. As home values declined, these loans became increasingly risky for banks. If a borrower has a 95% loan-to-value HELOC and his home declines 6%, the borrower is unable to pay back the [...] [...more]
National City, a major HELOC lender, is now on a form of probation with federal banking regulators. Reuters reports: “The banking subsidiary of National City Corp has signed a confidential memorandum of understanding with U.S. regulators, promising to address its rising amount of bad loans, a source familiar with the matter said on Monday. The [...] [...more]
One of the biggest complaints about the mortgage crisis is that homeowners used their equity irresponsibly during the boom. Now that HELOCs are harder to get, will homeowners spend less? The Wall Street Journal explores this question: “Steindel [economist at the Federal Reserve Bank of New York] spoke at an event sponsored by the National [...] [...more]
