Homeowner equity below 50% for first time since 1945
A troubling number.
Related: one of my favorite local writers describes how he tried to pay off a home equity loan only to be rebuffed at many turns. Also, a common sense view of the value of housing.
Which all plays into my theory that corporate lenders (not your local banker of old) as a core piece of their marketing strategy are looking for the vulnerable borrower. Keep flooding the borrower with offers of credit he hasn't asked for, or otherwise make it readily available, and some day he may find himself, down, depressed, or in trouble (if temporarily) and you've got one on the hook.
They won't ever admit to it, though.
Re: Homeowner equity below 50% for first time since 1945
The Quillen article was a very good read. I enjoyed his writing style and story-telling, but his commentary shows us that many people still don't understand what they're signing up for -- they haven't read the fine print. They have said they would do something, then are upset when someone holds them to it.
But, I can't say for sure that this explains everything Quillen went through -- I don't have the contract to look through. Early repayment is often discouraged and incurs a penalty becuase that is how the lender makes money -- that is how he feeds his children. If you lent out money and counted on the interest as income, you would certainly want to ensure that you got that whole amount. Similarly, you wouldn't want your employer to drop your pay by $1/hr if he gave you your check a day hearlier, would you?
There are some disturbing things in there, too, which may indicate that WaMu is not a good company to deal with. They wouldn't accept a wire transfer? Again, I don't have all the details, but that sounds like a bad company to me.
Lenders certainly aren't out to lure in people who aren't likely to pay loans back. That is bad business. It results in financial losses for the lender. A lot os sub-prime lenders have gone out of businesses because they hooked borrowers who couldn't pay their loans back.
Remember what the banker in the article said, "Never attribute to malice what can be explained by incompetence."