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$171 billion in home equity lines will reset between 2014 - 2018

heloc resetting
heloc resetting

The OCC estimates that $171 billion in home equity lines held by the biggest banks will reset from 2014 through the start of 2018, compared to just $28 billion in the previous four years.

The reset, or "end of draw," means borrowers won't be able to tap those lines any more - basically the equivalent of getting one's credit card canceled - and they'll have to start paying down the loan rather than just paying the interest.

The banks, analysts and others calculate that a home-equity reset can easily increase a borrower's bill by $300 per month, which more than doubles their current payment.

The big banks all report that customers are defaulting more often after their home-equity lines reset.

For example, at Wells Fargo, 7% of home-equity lines that had reset were 30 days or more late, compared to 2% of home-equity lines that had not reset.

Some borrowers may owe more than their homes are worth, and banks, despite insisting that they want to help, have become a lot stricter today about the loans they're willing to make.

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