Financially struggling Michigan homeowners may face a new problem.
98,000 Michigan homeowners have Home Equity Lines of Credit that are scheduled to reset at a higher interest rate during the next four years.
Nationally, more than half the three million homeowners with these lines of credit are seriously underwater on their mortgage.
“While these underwater homeowners experiencing payment shock from resetting HELOCs are at higher risk for default, the good news is that we’ve already seen a large wave of…resetting HELOCs in 2014 without a corresponding wave of defaults,” say Realty Trac’s Daren Blomquist.
But there is also bad news.
“We are entering a period of higher risk over the next four years when it comes to resetting bubble-era HELOCs,” says Blomquist.
Realty Trac say homeowners who default on Home Equity Lines of Credit could be more at risk for home foreclosures.