Quote:
Originally Posted by SteveinTO
Your home equity line of credit went from being a highly valued bank asset to a criticized loan commitment in the period of three months, with no effort on your part.
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Well, dunno about the "no effort on your part." Much of that HELOC cash was used to buy depreciating assets (American SUVs, granite countertops, flip houses in Southwest Florida, plasma screen TVs, Botox injections, etc). Those assets did not enhance one's income potential, and eventually the bill came due, "You mean I have to pay for this stuff???" The Federal Reserve has documented the effect of equity extraction on GDP, and we're seeing segments of the economy that were flush with speculative/play money.
The only unfortunate part is many responsible individuals are being caught up in the downsizing. Thing is, those HELOCs were aligned with unrealistic housing valuations. Now, those lines are being retuned to properly reflect reality. That's life.