Mortgage Lending Made Simple

Several Reports have been issued recently suggest that sharply lower home prices are driving faster increase in credit losses and causing lenders to increase reserves for residential real estate secured loans. However, the increase in losses on residential mortgages, we have seen will be compounded by very large increases in Home Equity credit losses.

Home Equity Credit Lines are Second Liens/Mortgages that only get paid after the 1st Mortgage is satisfied during a Foreclosure. Borrowers will in many cases pay their 1st Mortgage and try to negotiate with the Home Equity Lenders in hope of convincing them to take partial payment and forgive the bulk of the 2nd Mortgage, rather than risk loosing the entire loan at Foreclosure to the 1st Mortgage Lender. Credit losses are also likely to rise further in auto loans.

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