The latest area to feel the strain of the economic crisis is home equity loans. According to the American Bankers Association, late payments on home-equity lines of credit rose to an 11-year high in the first quarter of 2008.
This is particularly troubling, since this type of debt is usually kept current by most borrowers, even during economically difficult times. In an effort to preserve their homes, borrowers will stop making payments on car loans or credit card balances before they will allow equity lines to default.
"That people are now having trouble making payments on home-equity lines is a clear sign of the extent of the pressure on the household budgets," explains Joel Naroff, President, Naroff Economic Advisors.