Borrowers Are Falling Behind on Mortgages

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As home prices rise and the economy recovers, fewer borrowers are falling behind on their mortgages, or at least on their primary mortgages. During the housing boom, millions of Americans took advantage of equity gains by pulling money out of their homes through home equity lines of credit (HELOCs). These were largely interest-only loans for 10 years, but that decade is now up for some and coming up for many more. Now, as these loans enter their so-called amortization period--the time when borrowers must start paying down the principal--a growing number can't. "In the aggregate, the home equity market is experiencing lower delinquencies," said Herb Blecher of Lender Processing Services. "However, among the HELOC population that has already begun amortizing, we are actually seeing an increase in new seriously delinquent loans."Year to date, new problem loan rates--seriously delinquent loans that had been current six months ago--on those that have already begun amortizing are up 11 percent, as opposed to down 33 percent for those that have yet to begin amortizing. Nearly half of all ...

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