Friday, May 30, 2014
Dodd / Frank clumped first lien HELOC customers with Strategic Defaulters.
Most homes dropped 50% in value or less during the 2008 depression. However, some first lien HELOC accounts took out 80% value of their paid off home before the depression occurred and then strategically defaulted on their now underwater homes.
The simple solution would be to limit first lien HELOC's to 50% value of a home and to then limit how much could be taken out each month or each year.
Rather than fine tune first lien HELOC's so they could be a safe, reliable product for homeowners who responsibly paid off their homes and now in their retirement years would like that home to work for them in a very modest way, Dodd / Frank and the government is saying no to all REHELOC's, even first lien REHELOC's if the homeowner can't repay the HELOC when it resets.
What this basically means is that homeowners who own homes CANNOT slowly use it a responsible small bank that slowly puts money back into their local economies while giving the retiree a more comfortable retirement.
The government has created an unlevel playing field in which the fed can pump their own money into the economy as loans while denying the most responsible americans access to their own home equity.