Business, real estate

New Trouble for Banks

 

Insight: A new wave of U.S. mortgage trouble threatens

BY PETER RUDEGEAIR

Tue Nov 26, 2013

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Houses under construction are seen in Fontana in San Bernardino County, California, in this February 5, 2009 file photograph. REUTERS/Mario Anzuoni/Files

Houses under construction are seen in Fontana in San Bernardino County, California, in this February 5, 2009 file photograph.

CREDIT: REUTERS/MARIO ANZUONI/FILES

http://www.reuters.com/article/2013/11/26/us-usa-mortgages-homeequity-insight-idUSBRE9AP05J20131126

(Reuters) – U.S. borrowers are increasingly missing payments on home equity lines of credit they took out during the housing bubble, a trend that could deal another blow to the country’s biggest banks.

The loans are a problem now because an increasing number are hitting their 10-year anniversary, at which point borrowers usually must start paying down the principal on the loans as well as the interest they had been paying all along.

More than $221 billion of these loans at the largest banks will hit this mark over the next four years, about 40 percent of the home equity lines of credit now outstanding.

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