As negative equity becomes an even bigger problem for many homeowners, they are finding it impossible to keep current on their equity mortgage payments. Experts are urging those in this situation to seek a refinance on their equity mortgage before it is too late and foreclosure proceedings begin. This is a big problem for thousands thanks to falling home values and rising interest rates on equity mortgages. Until the housing values come back up, this could be a very big issue for thousands.
Chandrajit Bhattacharya, mortgage strategist at Credit Suisse, said: “Refinancing, that avenue is almost shut down. If distressed borrowers can’t sell, the only thing they can do is default.”
Grant Bailey, analyst at Fitch Ratings, said: “In an environment of falling home prices and limited refinancing opportunities, loans with these characteristics have shown a high propensity to default.”
Don Brownstein, chief executive of Structured Portfolio Management, a hedge fund said: “Prime jumbo borrowers traditionally had more equity in their homes but, in many areas with high concentrations of jumbo borrowers, home prices have fallen so far that much of that equity has been eroded, both reducing borrowers’ incentives to make payments and their refinancing options.”
Related reading : Equity Mortgages
