Late on First? Late on Second, Too

Two years ago, 45% of homeowners who were experiencing difficulty paying down their home equity lines of credit were also struggling to pay their first mortgages. Today, that figure has climbed to 61%, according to data also released by Equifax Analytical Services at the Consumer Bankers Association's annual Home Equity Lending Conference in Austin, Texas. Worse, in California and Florida, the two states that have become synonymous with the housing market debacle, late payments on HELOCs and home equity loans are associated with late first mortgages "over 80% of the time," senior consultant David Whitin reported. Equifax also found that because lenders have all but shut down home equity lending, bank card balances are starting to grow, and if economic conditions continue to drive consumers toward an increased reliance on their plastic, credit scores are likely to deteriorate. Mr. Whitin said home equity lenders would do well to study the main attributes that drive loan performance and adjust their exposure accordingly. Changes in these attributes, he said, result in "a five to 16-times increase in the HELOC delinquency rate."