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Banks Using Leverage to Force Home Equity Repayments

Dr.LKR. (thedoctor): Clarification on “When home equity line of credit [HELOC] securitizations reach a certain delinquency level, banks are no longer reimbursed for HELOC advances to borrowers.”

Before the predetermined delinquency limit for the trust is hit; every time the bank or mortgage servicer provides an advance to their HELOC customer, the bank or mortgage servicer is reimbursed an equal amount from the securitization trust.