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The $325 Billion Dollar HELOC Time Bomb

January 23, 2014 CFPB, HELOC 16 Comments
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There are 19 lenders sitting on top of $325 billion dollars of Heloc’s that are ready to reset.  When they do, lenders are somewhat fearful that it may result in new defaults.

Back in 2005 there were a lot of HELOC’s that were made.  Well believe it or not, many of them are still alive and kicking and are close to resetting.  When they reset, the we either come due as a balloon payment or they will become amortized.  Either way this can be a problem for many homeowners.  The question is, will people be able to deal with it, or will they throw in the towel and default.

mortgage time bombObviously the banks are hoping the people will be able to deal with it.  We believe there’s probably a bunch of business to be had for the loan originators out there.  Many homes have appreciated enough to do a refinance and pay these loans off, so it surely wouldn’t hurt to run a search on HELOC’s in your area, do a little market value research and make some calls.  The issue is truly at hand, so something is definitely going to happen.  If you’re wise you’ll get on the front of this potential little wave and ride it for a bit.

Look guys, the CFPB is literally a monster run a muck.  We’ve got first hand information that will make you sick to your stomach.  It appears to us that these guys are ruining smaller operations by forcing them to settle on issues that are simply ridiculous.  To us they are acting like big government bullies and it’s just not fair the way they handle themselves and treat those whom they are auditing.

If you’re in the Phoenix AZ or Newport Beach CA area’s be sure to click on the banners on your right that pertain to those events.  They’re going to be a lot of fun and very informative.  We’d love to see you there!

Have a great day!

Frank and Brian

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  • Suzohne West

    June of 2008 was the last you could get a first and second mortgage 100% CLTB with both loan programs being pay-option ARMS with a 10 year fixed period. Let’s wait for those to mature. Will be interesting.

    • Suzohne West


  • Kris Anderson

    I think your math is wrong. $50,000 on an equity line would have been at 4.00% back in the day. An interest only payment was/is $166.66. That payment will now be $302.95. BUT as short term rates go up, that payment will be worse. Expect it to be more like 6-7% and the payment to be $358- $400. My equity line started adjusting 2 years ago. My minimum payment went from $380 to $970! I was paying more than the minimum, but it was still a shock. At least I have had the luxury of a 3.25% rate for the last two years. I try to pay a little bit more so that when rates go up, I am OK.

  • Theo

    The elephant in the room is part time jobs. Prospects with part time
    jobs do not qualify for a loan. Of 953,000 Jobs Created In 2013, 77%,
    Or 731,000 Are Part-Time leaving the government as the largest creator
    of full time jobs.

  • Dee
  • Dee

    If you are still under water on your second mortgage CHW a CA non profit has a program that may wipe out the second if your lender will accept http://chworks.org/lending/c2mprp/ has more information, this is a program funded by the Treasury and it is great!

  • Scott

    other problem is you couldn’t combine the 2 mortgages under the HARP program so many of these HELOCs were left out there. Way to go Obama and your fellow morons!

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