RealtyTrac reported that owners of about 3.3 million U.S. homes face higher payments on home-equity lines of credit (Heloc) over the next four years as interest-only periods expire on loans originated during the bubble era, Bloomberg News reported yesterday. Those Heloc loans, worth a total of $158 billion, will begin requiring principal paydowns this year through 2018. Monthly bills will increase by an average of $146, raising the threat of defaults, especially for borrowers who have negative equity in their homes, the Irvine, California-based real estate information service said yesterday. About $88 billion of the resetting Heloc debt originated during the last decade’s housing bubble is backed by seriously underwater homes, where the owners owe more than 125 percent of the resale value and have less incentive to keep up payments, RealtyTrac said in its report. While resets in 2014 didn’t increase the default rate, the risk will rise this year and RealtyTrac predicts it will peak at 62 percent of resets in 2016.
