Home equity nightmares
Opponents of home equity lending, or second mortgages, in Texas
are scared to death by all kinds of nightmare visions in which
the banks seize everybody's property and put us all out on the
streets.
Now, let's say you need $20,000. If second mortgages were legal
and you had enough equity in your home, the bank might say, We'll
give you the $20,000 if you put up your home equity as collateral
in case you don't repay the loan.
The bank would not say, We'll give you $20,000 and take your
home in exchange. The bank would not say, We'll take your home
away because of this other loan over here where you did not put
up your equity as collateral. And the bank would also not say,
You have to take this loan and put up your equity as collateral.
Whether to accept the terms of the loan would depend on how
much you needed the $20,000 and how confident you felt that you
could pay it back. The choice would be entirely up to you.
With the current prohibition against home equity loans, the
bank's only option is to tell you that you can't have the $20,000
no matter how much you need it because you have no legally acceptable
collateral.
How is that better?
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Copyright ©1997,
Abilene Reporter-News / Texnews / E.W. Scripps Publications
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