Is there a ticking time bomb in the housing market?

Illustration by Tim Meko, Urban Institute.
Illustration by Tim Meko, Urban Institute.

By Maia Woluchem | Metro Trends.org

During the housing boom, origination of second mortgages surged to historic levels as homeowners sought to take cash out of appreciating homes or finance a home purchase without private mortgage insurance. A large percent of these second mortgages are now poised to reset over the next several years, which will increase monthly payments for many homeowners.

A panel of experts recently convened by the Urban Institute’s Housing Finance Policy Center examined these outstanding second liens. One expert explained that the pending resets are not likely to trigger another significant round of defaults and foreclosures. Another looked closely at the performance of second liens, comparing them to first liens for the same borrowers. A third looked at the behavior of first liens with and without different types of second liens.

Continued:

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