Unused commitments on home equity lines of credit shrank by $9 billion in the first quarter and by $31 billion in the second quarter as banks and thrifts reduced their exposure to rising losses. Federal Deposit Insurance Corp. data also show that chargeoffs on HELOCs have jumped from 50 basis points in the third quarter of 2007 to 200 bps in the second quarter. And chargeoffs on closed-end junior liens have jumped to 3% during the same period. "The chargeoffs are beginning to look like unsecured consumer loans," said FDIC senior banking analyst Ross Waldrop. He noted that the chargeoff rate in credit card loans is 5%. But junior liens are at 3% and climbing.
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