Loan sharks circle homes
Wednesday, March 26th, 2003
Home equity loans are the crack cocaine of the American economy — fun while they last but then a real disaster. Banks like Wells Fargo are pushing Americans to “unleash the spending power locked up in your home!” and arguing that the practice isn’t risky because banks generally lend no more than 75% of the home’s value. Well, sure, the practice is not as risky for the bank that has the home as security, but for a family that has to sell or give up its home if the economy softens, the practice is potentially ruinous.
How many remember that half of America’s mortgages were in default in the depths of the Great Depression.
Proof we should worry: 10% of spam is pushing home refinancings. Yes, folks, step right up… pulling cash out of your home to buy a new car is about as wise as paying to “increase your bust size 20%!!!” and “FREE LUNCHES FOR ALL!”