Latest news with #MortgageMonitorReport
Yahoo
29-05-2025
- Business
- Yahoo
How to protect yourself from HELOC fraud
HELOC fraud is defined as someone stealing funds from an existing home equity line of credit or opening a new HELOC account in a homeowner's name for the purpose of withdrawing funds from it. Common scams include account takeovers, identity fraud, title fraud, and even the creation of counterfeit HELOC checks — all typically carried out via phishing or stolen data. Warning signs of HELOC fraud include unfamiliar transactions, missing statements or sudden increases in your HELOC balance or minimum payments. You can protect yourself from fraud by monitoring your account, setting up account alerts, and reporting any suspicious activity or draws promptly. Home equity lines of credit (HELOCs) are a common way for homeowners to borrow against the equity in their homes. But while HELOCs offer flexibility and relatively low interest rates for homeowners, they're also becoming a lucrative target for thieves. The reason? A HELOC can offer hundreds of thousands of dollars, borrowed against the equity that homeowners have accumulated in their property. And they have considerable stakes to draw from these days: In fact, according to a recent Intercontinental Exchange (ICE) 'Mortgage Monitor Report,' the average mortgage-holding homeowner currently has about $203,000 worth of tappable home equity. The size of HELOC credit lines and balances has grown steadily over the past year, too. With the rise of mobile banking and online document storage, the risk of HELOC malfeasance has also increased. But by understanding how it happens, and the precautions you should be taking, you'll be one step ahead of the game in protecting your home from one of the newest trends in financial fraud. HELOC fraud occurs when someone gains access to a homeowner's line of credit, either by stealing funds from an existing HELOC or by impersonating the homeowner to open a new HELOC. 'Identity theft is one way we have seen HELOC fraud committed, where a person obtains information about a homeowner through nefarious means, and then forges documents to obtain a loan in the homeowner's name,' says Rose Krieger, senior home loan specialist at Churchill Mortgage. Unlike other forms of identity theft, someone stealing from your HELOC can easily fly under the radar, because of the nature in which the money is typically borrowed: slowly over many weeks or months, rather than all at once. People often make only occasional draws from their HELOC, so they don't monitor the account frequently. Since draws also tend to be sizable, it's unlikely that a lender would flag an unusually large one, as it might do with a credit card. And since HELOC interest rates regularly fluctuate, an increase in a minimum monthly payment (caused by the fraudster's draw) might not seem out of the ordinary. In other cases, scammers may use forged documents or stolen info to open a HELOC in someone's name, cash out quickly, and disappear before either the lender or borrower realizes what's happened. It's unfortunate, but many details about a home, the homeowner and liens on a home (like a mortgage or home equity loan) are a matter of public record. HELOC fraud can take several forms. The most common methods include: 1. Account takeover fraud: Someone gains access to a homeowner's existing HELOC account through phishing e-mails or texts, data breaches, or stolen credentials (like your HELOC checks or debit cards). Once inside, they can transfer funds, change contact info, or request checks and wire transfers, all without the homeowner's knowledge. 2. Synthetic identity fraud: Scammers can use a combination of real and fake information to create a new identity and apply for a HELOC in a homeowner's name. This often involves using stolen Social Security numbers and fabricated documents to trick lenders. Last fall, several people in Orange County, Calif. were arrested and charged with stealing homeowners' identities to obtain over $500,000 in HELOC funds – money secured by the identity-theft victims' actual homes. 3. Title fraud: In more rare and sophisticated cases, a scammer may forge documents to transfer the title of your home into their name, then take out a HELOC as if they were the owner (which, on paper, they now are). While less common, this type of fraud can be more difficult to resolve. 4. Counterfeit HELOC checks: Another growing trend involves scammers creating fake checks tied to legitimate HELOC accounts. They do this by using information available in public records – like the homeowner's name, address, HELOC lender and HELOC account number – to forge convincing-looking checks, which they then use to draw on the line of credit. HELOC fraud can be difficult to detect, but there are some red flags homeowners should watch for. If you notice any of the following, it could be a sign someone has hacked your existing HELOC and is attempting to withdraw funds, or has tried to open one in your name: Unrecognized draws or transactions on your HELOC account Statements or notifications you don't recognize Missing statements or sudden changes to contact preferences (including mailing or email address) A sudden drop in your credit score A sudden increase in your outstanding HELOC balance/monthly minimum payment Lender notices regarding a HELOC account you didn't open If you believe that your existing HELOC has been compromised or that a HELOC has been opened in your name, acting quickly is your best line of defense. Here's what to do: 1. Contact your lender immediatelyNotify your bank or HELOC lender as soon as you notice suspicious activity. Review the activity with them and ask to have your account frozen or suspended to prevent further withdrawals. 2. File a police reportReport the fraud to your local police department. A police report can help support your case when dealing with the lender, credit bureaus or county clerk offices later on. 3. Report identity theft to the FTCGo to to file a complaint with the Federal Trade Commission. The FTC provides a recovery plan and documentation to help you dispute any fraudulent accounts created in your name. 4. Contact credit bureausNotify all three credit bureaus and place a fraud alert or credit freeze on your accounts. This will help prevent any additional fraudulent accounts from being opened in your name. 5. Check your property titleIf you suspect title fraud or deed theft, check your county recorder's office to verify the property title is still in your name. If it's been changed, you may need to involve a real estate attorney to resolve the issue. 6. Work with your lenderDepending on the nature of the fraud and how quickly it was reported, your lender may be able to recover some or all of your stolen funds. You should be prepared to provide documentation like a police report to support your claim. One bit of good news: You're not on the hook to repay the missing money, or any interest on it. As open-ended lines of credit, HELOCs are covered by the Fair Credit Billing Act of 1974 (part of the Truth in Lending Act), which limits your liability for fraudulent charges. But you must report them promptly. First of all, keep in a safe place any account-related paperwork and borrowing tools, like checks or cards (some lenders, like PNC, issue both). These tools make it more convenient for you to access your HELOC funds, but unfortunately make it easier for fraudsters, too. In addition to monitoring your account and using tools like credit freezes and two-factor authentication, it's essential to be cautious about unsolicited communication. Scammers often impersonate lenders by sending emails, texts, or even initiating phone calls that seem legitimate. 'To protect yourself, it's important to regularly check your credit report to ensure all debts are accurate,' says Krieger. 'Be mindful of calls and text messages claiming to be [from] your financial institution — remember that your financial institution will never call you and ask for your full Social Security number, account number or codes sent to your phone.' These messages may claim there's an issue with your HELOC account or ask you to verify personal information using a link or a passcode. If you receive an unexpected request (even one that looks like it's from your bank), don't respond right away – directly to that message, at least. 'When in doubt, hang up and call your financial institution, or go in personally,' Krieger advises. Also, check your account on the lender's website or its app yourself; if a message is legitimate, it may appear when you log in. HELOC fraud is a real and growing concern. While there are legal safeguards and lenders have security measures in place, protecting yyour home equity and HELOC funds in today's day and age ultimately starts with you. It requires a healthy dose of vigilance — and skepticism. Keep in mind that lenders will never ask you to confirm your identity by clicking a link in a text or providing personal information via an unsecured channel. By monitoring your account and statements, keeping checks and cards secure, and staying alert, you can reduce your risk and keep your home equity funds safe. And if fraud does happen, acting quickly can help you limit the damage and ensure you're able to fully recover your account and any stolen funds.
CBS News
15-05-2025
- Business
- CBS News
Is your home equity trapped right now? Here's what experts say to do.
We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. There are still reliable ways to free up equity in your home, even in today's economic climate. Getty Images Homeowners have various financing options through their home equity. But in today's economic climate, it's become harder to access. After its third meeting in 2025, the Federal Reserve held interest rates steady again, bringing no reprieve to borrowers in its quest to fight inflation. Due to ongoing uncertainty and fluctuations in the market, some banks have tightened their lending criteria in certain areas. So while homeowners have benefited from increasing home values, not everyone can take advantage of home equity borrowing. According to the March 2025 Intercontinental Exchange (ICE) Mortgage Monitor Report, homeowners are sitting on an average of $313,000 in home equity. But due to stricter credit requirements, rising borrowing costs due to elevated rates, and a shifting job market, equity is essentially inaccessible for some and "trapped." If you're a homeowner, you might feel your home equity is trapped and wonder what next steps you can take. We spoke with home lending experts to uncover what's driving this and what you can do to effectively use your home equity. Start by seeing how much home equity you could borrow here. Is your home equity trapped right now? Home equity has long been a powerful borrowing tool for homeowners. Whether it's used for debt consolidation or home renovations, it's a way to get the most out of your home while keeping borrowing costs relatively low. But "trapped" equity, which means equity that is built in but not readily or easily accessible, can be holding people back for several reasons, including: Elevated interest rates Some homeowners were fortunate enough to secure historically low mortgage rates several years ago. While having a low mortgage rate is a benefit, it can also lead to home equity being "trapped." First, many homeowners don't want to sell their home now because it would meant they'd have to give up their low mortgage rate. If they sell now, they can cash in on that equity. But if they want to buy another home, they have to contend with current mortgage rates, which are significantly higher than several years ago. According to a survey, 55% of respondents who have been thinking of selling their homes for more than one year feel locked in due to mortgage rates. Currently, 82% of outstanding mortgages have a sub-6% rate, according to Compare that to current Freddie Mac data, which shows that mortgage rates on a 30-year fixed-rate mortgage are currently 6.76%. "With fewer homes for sale, selling to access equity often means buying another home at today's high prices and rates. That's a tough pill to swallow, so many stay put, keeping equity locked," says Steven Glick, director of mortgage sales at HomeAbroad, a real estate investment fintech company. Another common way for homeowners to tap their equity is through a cash-out refinance. But with elevated interest rates, for many Americans, it simply doesn't make sense. "A lot of people either bought or refinanced during 2020, 2021, when rates were pretty low. When you want to get equity out of your home, typically you really do that in one of three ways," says Rose Krieger, senior home loan officer at Churchill Mortgage. "The first one would be a cash-out refinance, which would affect your overall interest rate. You would be subject to the current market rates. For a lot of people, that's double, if not a little bit more than what their current interest rate is, which would significantly increase their monthly payment." Compare your home equity borrowing options to determine which is most cost-effective now. Stricter lending requirements Home equity borrowing options are an attractive alternative to other loan products, especially high-interest credit cards. Even so, borrowers must meet the eligibility requirements set by home lenders and financial institutions. That means looking at your credit history, debt-to-income ratio and employment situation. Some employment sectors are seeing tumultuous upheavals that can affect home equity borrowing. "Layoffs in sectors like tech and government make lenders cautious. They worry you might not repay if your income is unstable. Plus, fears of a recession or tariff-driven market swings add risk, so banks tighten the purse strings," says Glick. Point estimates that every year, 1 in 11 homeowners who have a mortgage experience a job loss, decrease in pay, or transition to self-employment. These events may affect credit, job stability, and income verification. Because of that, equity may become "trapped" because borrowers no longer meet the basic underwriting criteria set by home lenders. What to do if your home equity is trapped If you feel like your home equity is trapped, it can be frustrating. You may feel you can't take advantage of the built-in wealth your home provides. Here are some practical tips to help you tap your home equity: Look into alternative home equity borrowing options Given the high-rate climate we're in, a cash-out refinance may be off the table. But there are two other home equity borrowing options that may be a better option during these times. "So the best option for homeowners who want to tap into equity without refinancing, I would say it's HELOCs, which is the most flexible way," says Nadia Evangelou, senior economist and director of real estate research at the National Association of Realtors. Home equity loans are another option. Unlike home equity line of credit interest rates, which are typically variable, home equity loan interest rates are fixed. Evangelou says home equity loans are "great for one-time, large expenses. Budgeting is easier because you know your payment. You know your payment and the interest costs from the start." With home equity loan and HELOC borrowing, you can maintain your current mortgage rate while tapping your home equity. "I feel like the HELOCs are more popular right now because they do not affect your first mortgage rate. So if your rate is two and a half right now and you get a HELOC, you're still going to have that two and a half rate on your first mortgage," says Krieger. Improve your credit If you're unable to access your home equity due to your credit, you can take steps to improve your rating. Both payment history and credit utilization have a major impact on your credit score. Krieger recommends working on your credit, but also discussing your options with a lender. "Just paying off all your debt isn't the answer. We usually have different systems, computer software that we can use to help give you an idea of what to pay off versus what not to pay off to get your credit where it needs to be for a HELOC. I think that would be one of the easiest ways," says Krieger. Stabilize employment history If you've been laid off or transitioned to self-employment, it may be tough to qualify for home equity borrowing products. Home lenders like stability and want the assurance that you have the means to repay what you borrow. Focus on stabilizing employment history and income so you have the verification you need. "For self-employment, typically you're required to be on that job for two years. But with HELOCs, the rules can be a little different at times," says Krieger. The bottom line As a homeowner, you've likely seen remarkable growth in your home equity over the past few years. But if your home equity is trapped, you may not be able to take advantage of it the way you want. Taking steps to improve your credit, stabilize employment, and looking into alternatives to a cash-out refinance can help. Look at various home lenders' terms and eligibility requirements. Compare home equity line of credit and home equity loan rates. Despite rates being higher than they were several years ago, relative to other borrowing options, they still typically come out on top in terms of cost savings.
CBS News
03-03-2025
- Business
- CBS News
What's the average home equity amount right now?
If you've been trying to borrow money recently, you're likely aware of how expensive it is to take out a personal loan or use a credit card right now. That's because, as the Federal Reserve hiked rates in 2022 and 2023 to try and temper inflation, these types of borrowing costs skyrocketed in tandem. And, while the central bank implemented three rate cuts at the end of 2024, leading borrowing rates to fall slightly, inflation has been ticking back up over the last few months and the Fed appears to be keeping interest rates paused for now. In turn, the rates on these and many other borrowing options remain relatively high overall. But while affordable borrowing options may be limited, homeowners who are looking for an affordable funding source have a good option to consider: their home equity. Home equity levels have reached new highs over the last few years, leaving the average homeowner with a lot of equity to tap into. And, there are a few different home equity borrowing options to consider, including home equity loans and home equity lines of credit (HELOCs), which currently have average rates sitting at a two-year low. How much equity does the average homeowner have to borrow against, though? Compare the rates you could get with your home equity options now. Here's how much home equity the average homeowner has now The average homeowner currently has about $313,000 worth of equity in their home, according to the March 2025 Intercontinental Exchange (ICE) Mortgage Monitor Report. About $203,000 of that equity, on average, is considered tappable, meaning that it can be borrowed against while still maintaining a 20% equity cushion. That means the average homeowner now has slightly less home equity to tap into compared to the previous average, which was $319,000 in November 2024. It's worth noting, though, that home equity is still up by 6% overall compared to this time last year. In total, homeowners are now sitting on a collective $17 trillion in home equity, including $11 trillion in tappable home equity. One driver behind the decline in home equity levels was an expected pullback in annual home price growth, according to the report. Nationwide, home price growth experienced a noticeable decline in January, falling to 3.0% from 3.4% in December 2024. And, nearly one-fourth of the 100 largest housing markets saw monthly home prices ease on a seasonally adjusted basis in January. But while home equity levels have dropped slightly over the last few months, homeowners still have plenty of equity to borrow against if they need to fund a large project, consolidate debt or tackle another expense — and at today's rates, both home equity loans and HELOCs are some of the most affordable options to consider. Find out what your home equity borrowing rate could be now. How to borrow home equity effectively If you want to borrow from your home's equity right now, HELOCs and home equity loans are both options worth considering. Here's a quick overview of how HELOCs and home equity loans work: HELOC: A HELOC offers access to your equity through a revolving line of credit you can draw from, as needed, up to the credit limit. You're typically able to draw from this line of credit for between 10 and 15 years and, generally speaking, you're able to make interest-only payments on what you've borrowed during that time. The repayment period typically lasts between 10 and 20 years, during which you'll make payments toward your principal and interest. The big benefit of HELOCs is that they typically have variable interest rates, meaning that if rates drop in the future, your payments would, too. However, rates could also rise, increasing your monthly costs. Home equity loan: A home equity loan allows you to tap into your home equity through a lump-sum loan with the full loan amount disbursed upfront. The repayment period begins after you receive your funds — there is no "draw period" like HELOCs. Home equity loans have a fixed rate, though, meaning your interest rate stays the same for the life of your loan, which can protect you if rates rise in the future. If rates fall, though, you'll have to refinance your home equity loan to take advantage of the lower-rate environment. The bottom line Homeowners currently have an average of $313,000 in equity in their homes, down slightly from the average amount of home equity they had in November 2024. Homeowners who want to borrow against this equity have a few options to choose from, including HELOCs and home equity loans, both of which have lower average rates than many of the other borrowing options. It's important to remember, though, that your home is used as collateral for this type of funding. If you default on your payments, your lender could foreclose on your home.
