Tuesday, December 23, 2014

Foreclosure Crisis Relapse Concerns

Many Chicago-area residents have been pleased to learn that Illinois’s real estate market is recovering and that the foreclosure crisis appears to be behind us. However, a recent article in Mortgage News Daily suggests that the foreclosure problem could be “merely gathering strength to come roaring back.”
Housing “Landmines” Could Pose a Threat to Recovery
Why would the housing market begin having trouble again? A report from RealtyTrac emphasizes that general foreclosure activity continues to decrease across the country, but at the same time, a “tetrad of housing landmines” exist. These issues could quickly rise to the surface, thereby threatening housing recovery in Chicago and across the country. Indeed, sleeping problems could “trigger a surge in defaults, repossessions, and short sales.”
What are some of the issues that make up this dangerous tetrad? According to RealtyTrac’s Housing News Report, Chicagoans should be wary of some of the following issues:
·      New defaults in mortgage modifications that were completed through the Home Affordable Modification Program (HAMP);
·      Resets of Home Equity Lines of Credit (HELOC); and
·      Borrowers who remain underwater and delinquent.
It’s not surprising that borrowers who still can’t make mortgage payments or remain underwater on their loans could threaten the recovery of the housing market. But what’s the problem with these impending issues?

HELOC Resets
HELOCs are home equity lines of credit, which function as lines of credit for the homeowner from which she or he can draw. Rather than getting a fixed amount of money, you can borrow up to a certain amount, and you can decide when and how much you need. In short, if you have a home equity line for $100,000, you’ll be able to borrow up to that amount, but you won’t need to borrow the entire amount if you don’t need to. Borrowers draw money out of the home equity line much like they would from a bank account or a credit card account—e.g., using a card or writing out a check.
So what’s a HELOC reset? These lines of credit have a period during which borrowers can draw money out, and then a reset period, or repayment period, in which the loan must be repaid. The problem with these resets is that borrowers can be shocked by the high payments they owe. Many of these HELOCs were put in place during the housing boom, according to an article in the Mortgage Monitor, and many will go into repayment periods soon. Over the next three years, the article explains, “at least 2.5 million borrowers face these resets.”
Even in the best economy, families can struggle to make their mortgage payments. If you are having trouble making your mortgage payments and have questions about avoiding foreclosure, don’t hesitate to contact an experienced Oak Park foreclosure defense lawyer. Many options exist for consumers in the Chicago area, and the attorneys at the Emerson Law Firm can talk with you today.
See Related Blog Posts:
New Statistics on Chicago Area Foreclosure Starts