Boats
Cars
Hookers
Cocaine
Granite Countertops
And one hell of a spending binge these past few years. Free money! Free money! Oh, crap, you mean it has to be paid back? But that's not fair - my home value has plummeted. OK, screw it, you can have the damn house. Here. Take the keys.
thanks ace...
Home-Equity Loans May Be Next Round in Credit Crisis
Little by little, millions of Americans surrendered equity in their homes in recent years. Lulled by good times, they borrowed — sometimes heavily — against the roofs over their heads.
Now the bill is coming due. As the housing market spirals downward, home equity loans, which turn home sweet home into cash sweet cash, are becoming the next flash point in the mortgage crisis.
Americans owe a staggering $1.1 trillion on home equity loans — and banks are increasingly worried they may not get some of that money back.
March 27, 2008
So the "party all the time" Americans owe $1.1 TRILLION in home equity loans (HELOCs). How much of that do you figure won't be getting paid back?
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26 comments:
Bare minimum 50% won't be paid back. People that pulled all the equity out of their homes never planned on paying the money back because they figured they could just keep refinancing the loan every couple of years because their home value would only go up.
Anyone walking away form a spent up HELOC will be screwed for life. They will follow you to the ends of the earth to milk you for every penny until the day you die.....BWAHAHAHAHAH
Juancarlos Montenegro
Keith, I think that any MTV hip hop cRap video would have been a better choice even though it would have made many of us vomit.
Lol at "the list". I've heard so many people brag about their granite countertops that they put in (after getting a heloc) that you would think their house was worth an extra 200k.
Nope, not me. Paid that HELOC off two years ago. It started as a piggy back 10% to "main" mortgage, and at 4% it was a sweet deal. "They", however, had some plans for that rate and pretty soon it started to climb. When I paid it off our APR was over 8%...
Isn't this old news? Any HELOCs, seconds, etc. are at risk when the house values drop materially.
That's Trillion with a T right?
Oh shit
This is why no one is lowering their asking prices for houses! The Today Show had a piece on why sellers were not lowering their asking prices on thier homes but the failed to mention the HELOC debt factor. Many sellers who have helocs are adding that debt onto the asking price for their houses and thus transferring the debt to someone else, or at least trying to. That's why I will only buy new construction, never existing unless I know the sales history thoroughly.
Americans owe a staggering $1.1 trillion on home equity loans — and banks are increasingly worried they may not get some of that money back.
MAY? SOME?
Someone is going for the understatement of the year award ;-)
Only 1.1 Trillion? I would have guessed much more.
We're goin' to HELoc in a $1.1T handbasket.
"The Today Show had a piece on why sellers were not lowering their asking prices on thier homes but the failed to mention the HELOC debt factor."
These fools will go down with the ship. They can't sell their home for what they want because banks and builders are dumping homes nearby for much less.
K is happening people,
The Greater Depression is approaching and its approaching fast!! Please Reat the link below.
Food Banks and Soup Lines are already here.
http://tinyurl.com/2wzh8z
Here is South Florida, the realtors are becoming hookers. I'm dead serious.
Good looking women, with good attitutudes trying to pay their rent, selling themselves on craiglist.
First the realtors were disintermediated. Now its the pimp's turn at being put out of a job!! Got to love it!
I live in the heloc capital of the world. It's called South Florida! There are mores hummers, boats, 745's, 750's, 650's, e55's, s63's amgs, aston martins, bentleys, orange country choppers, west coast choppers, here than anywhere except maybe cali. All bought on helocs! A nice mcmansion has to have a pool with all of the granite counters and stainless appliances, right! Also do you know how many people took out on heloc's to be "investors" in the condo conversion craze that happened here in 2005 and 2006? Thousands!!!! Many Thousands!!!!
On another note:
I have a good story to share with the HPers! I had to appraise this house in Stuart, Florida. This is a McMansion of 3975 ft unders air with a 3 car garage and a realtor paid $600,000 for it in early 2007 He told me the developer left his place unfinished and he had to put the carpet in the rooms and punch out work. This house has been lived in by anyone and has been vacant for 9 months. He is in a short sale position with his bank. Keith, by the way how is 5/3rds bank? He said it's not his problem anymore! It came it in below $440,000!! This whole neighbor hood is short sale central>
Rich in Fl
HELOC is a common mental disorder in the suburbs also known as:
Hawaiian
Escape
Larceny
Of
Capital
or
Hummer
Endowment
Lust
Of
Consumption
or
Hallucinatory
Exuberant
Lapse
Of
Comprehension
I heard today from a loan officer at GMAC that MGIC and PMI will no longer guarantee loans for 100% of the appraised value and that appraisers now have to sign off on a little box on loan documents. This will really narrow down eligibilty for new refi's and hopefully put some fear of god in many appraisers.
The HELOC money is not going to be repaid ever. That should be more than obvious. The First trust liens are only going to recover about half after all is said and done.
Banks wont lower the mortgage rates even though the Fed is down to 2.25%
Banks wont renegotiate the 10 plus percent subslime and ALt-A.
Banks wont write off the "froth" portion of the mortgage balance to recover at least most of the money.
Banks have found Jesus and the old standards are back. In some cases even more strict than in the "old" days.
Banks are suing each other and the downgrades on each other has become a bloodsport. "Sir I know you said not to disturb you while you call in that margin on Mr. Smiths bank, but Mr Johnson is on line 2 with a margin call for us!!!"
The insurance backing the mortgages isnt worth the paper the policy is written on. So no help there, once you crush the capital of MBIA AMBAC and the others.
The Shadow banking system is running into a nice brick wall, with no reporting requirements or regulations. Cant play in that sandbox without finding catshit buried under your castle anymore.
Lenders are still hiding the losses and bold face lies are everywhere. "Tell those guys in accounting that I want to see huge cash reserves on our first quarter report or they will be shot!!"
And our Government, well...you know those idiots cant find anything but a hookers phone number or hangout in the mens rooms at the airport.
The banks and homedebtors are waiting for the "Big Bailout" that isnt going to arrive. Washington cant agree on anything close to a sweeping bailout of the mortgage mess. (thank god)
Rome is burning, but its a good thing. Crooks cant stay hidden while on fire.
Banks are going to take everything else down with them in the process.
Bernake is trying to stop this, bless his heart, but he shouldnt blow taxpayer money keeping a cripled corrupted system going.
The Fed obviously knows what banks are in the most trouble, so more Sunday night specials are certainly on tap.
Being worried about HELOC's is a joke, the music has stopped, and there are no chairs in the room at all my friends.
"These fools will go down with the ship. They can't sell their home for what they want because banks and builders are dumping homes nearby for much less."
If the banks are really using a tougher means test, only a fraction of folks can buy bubble priced homes with HELOC postage stamps all over them!
I won't buy either and it's primarily because of the HELOC reason.
Here is South Florida, the realtors are becoming hookers. I'm dead serious.
Good looking women, with good attitutudes trying to pay their rent, selling themselves on craiglist.
------------
Just exactly where in South Florida is this?
condosleazy price said...
Keith, I think that any MTV hip hop cRap video would have been a better choice even though it would have made many of us vomit.
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Hell NO! That music rocks!!!
Long live the 80's.
And FU%K rap!!!!!!!!!!!
1 Trillion for HELOCs.
1 Trillion for credit cards.
What won't be paid back? The amounts are breathtaking. Credit destruction is deflationary, because banks become insolvent and cannot lend anymore to anybody.
> The HELOC money is not going to be repaid ever.
HELOCs are recourse. The only way to discharge them is foreclosure AND bankcruptcy.
> Banks have found Jesus and the old standards are back. In some cases even more strict than in the "old" days.
Good. One of my conditions of buying was the return of traditional lending (to remove competing buyers high on credit).
You guys are a bunch of fools. Eventually the federal government will bail out people who are in trouble and then you guys will look like idiots because all of you HP'ers said "there won't be a bailout because the government can not afford it".
". . . and banks are increasingly worried they may not get some of that money back."
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Hahahahahaha! That's rich!
They say it like it's just occurring to them now -- and like there's actually some possibility that they will get all that money back.
Hahahahaha! Tell another, tell another!
How about cocaine and hookers on granite counter tops?
Posting that Eddie Murphy video? Quite possibly the most awesome thing I've seen on a housing blog.
Well at least alot of HELOC lenders are starting to sweat and slashing if not suspending the lines. There is a Washington Post article
from February 23 about this.
I believe that most HELOCs can be "called" also, i.e. the lender can demand that the loan be paid back immediately. If a borrower is fully extended on the loan, that certainly would be suboptimal for the borrower.
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