Ironically, the new boom comes just as the pain of the last home equity line boom is ending. These credit lines have a 10-year "draw period," when borrowers are required only to pay interest on the loans. After 10 years, the loans "reset," and borrowers must start paying principal, which can more than double the monthly payment. That caused huge jumps in home equity line delinquencies, which were up 74 percent last year, according to mortgage data firm Black Knight Financial Services.
This year, about 1.5 million home equity line borrowers will start having to pay principal on loans they took out in 2007, as the last wave of pre-crisis loans reset. That is roughly 19 percent of all active home equity lines of credit. It could have been worse, but thousands of borrowers got out of their loans before the reset.
"For the 2007 vintage, we've seen much higher rates of prepayment out of those HELOCs, mostly because there's been such a favorable interest environment," said Mitch Cohn, spokesman for Black Knight. "But basically everybody who could refi their way out of the payment shocks already has."
For those who did not, equity is a problem. One in 5 borrowers facing resets this year has less than 10 percent equity in their homes, making refinancing out of the loans difficult.
Watch: Home sales flashing early warning signs