Home Equity Loans Available Again
Banks are again offering home equity loans.
Lenders are expected to make about $36 billion in new home equity loans over the next year, according to Moody’s Economy.com. That’s actually more than the $34 billion in home equity loans made in 2008.
The difference will be the way the money is spent, says Frank Nothaft, chief economist at Freddie Mac. Most of it will go for necessary home improvements. “Consumers are better at managing their own personal balance sheet as a result of the difficult recession we went through,” Nothaft says.
Source: Bloomberg, Kathleen M. Howley, Prashant Gopal, John Gittelsohn (03/11/2010)
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Home Equity Loans Program Held Up
Home equity loans gone bad remain a stumbling block to the housing recovery.
“If I had to name one sticking point, it’s the second mortgage,” said Ethan W. Gregory, an associate with First Coast Realty Associates in Jacksonville, Fla., who specializes in short sales.
Last April, the U.S. Treasury Department offered home-equity lenders a subsidy to reduce interest rates on seconds to as low as 1 percent and lien holders would get as much as 12 cents on the dollar to retire debt. But that program hasn’t gotten off the ground.
None of the lenders holding a combined $1.05 trillion in home-equity debt has signed a contract to participate in the second-mortgage modification plan. But the largest banks remain “committed” to joining, said Meg Reilly, a Treasury Department spokesperson.
“Because there has not been a systematic method of notification to second lien holders when a first lien on the same property is modified, ramp up has taken some time,” Reilly said in an e-mail.
Source: Bloomberg, Jody Shenn (10/19/2010)
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