When a HELOC recasts to a higher payment, borrowers default at rates four times larger than normal. The housing market bottom of 2012 was engineered by policy at the major banks. Millions of borrowers stopped making payments, and rather than foreclose on them, lenders decided to modify loans and get whatever payments they could from borrowers and wait until house prices recovered. Since the alternative for lenders was insolvency, they didn't have much choice; can-kicking became the policy of necessity. Politicians eagerly embraced lender can-kicking, and some legislatures mandated it. Borrowers desperately pleaded for can-kicking, and lenders needed to comply for survival, which is why it really happened. If lenders had foreclosed on all the delinquent mortgage squatters and liquidated…[READ MORE]