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Brian Kramer
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I am interested in the home equity line of credit loan balances. Borrowers pay interest only on this debt. With housing values falling 30-50%, there is likely zero collateral value supporting these loans and substantial losses seem likely as the primary mortgage is foreclosed, or the property is sold in an orderly market transaction. Borrowers may want to de-leverage these home equity balances, but there is little incentive for an underwater borrower to repay the balance. Are banks being forced to mark these loans to market and how do these transactions affect the deleveraging you discuss?
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Mar 21, 2011