Flood of Foreclosures Looming?

on 6:05 PM

An MSN Money article this week forecasts a potential flood of impending foreclosures when millions of Americans soon start having to pay down principal as well as interest on the home equity lines of credit (HELOCs) they took during the housing boom. Reportedly, many of those homeowners are already underwater and used their home equity like an ATM cash machine.

3.3 million homes still carry HELOCs from 2005-08, with 1.8 million of those, 56% of the total, considered "seriously underwater." Consumers who own those homes owe lenders at least 125% of a property's current market value. RealtyTrac predicts that once the average HELOC borrower's ten-year interest-only period ends, the person's monthly bill will more than double. RealtyTrac expects the biggest problems in California, Florida and Illinois, which have not only high levels of boom-era HELOCs in general but lots of loans tied to seriously underwater homes.

Read the MSN Money article in entirety.