Esoteric Dissertations from a One-Track Mind

March 28, 2008

Credit Crisis: Equity Loans

Filed under: economy — Tags: — codesmithy @ 9:46 am

The New York Times has an article called “Equity Loans as Next Round in Credit Crisis.”  Home equity loans represent second-lien holders.  It basically means home equity loan creditors don’t get paid until first-lien holders (usually, the original mortgage) gets paid in full.  Now with homes worth less, these second-lien holders are looking at potentially huge losses.  Hence, they are using a bit of the legal standing that they do have to try to reduce some of their loss.  In some cases, it is just denial.  However, these creditors would rather go down fighting than concede defeat.  In an age of corporatism, it will probably be the people in the middle who will suffer the most.

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