Ed Dodson responding...

Bryan Caplan wrote:

> Why isn't virtually everything financed by home equity loans?  The tax
> advantage seems so large, and the loophole looks big enough to drive a
> truck through.  What am I missing?

Ed Dodson here:
Other than the purchase of a house, we may be moving in the direction of
more cnsumer purchases being made using a line of credit collateralized by
a mortgage on a person's house. This is being facilitated by the
introduction of "debit" cards. From a lender's perspective, however, there
is some increased risk based on lien position and whether there is real
collateral value in the house. An appraisal is not generally cost
effective to perform, so lenders have to rely on data that tells them
values in a given neighborhood are stable or have increased. Why the
equity line of credit is not used even more than it is has much to do with
consumer education and the entrenched nature of credit card use.

org:Fannie Mae;Housing and Community Development, Northeast Regional Office (NERO)
email;internet:[EMAIL PROTECTED]
title:Senior Affordable Housing Business Manager
note:If you need to reach me during non-business hours, send an email to: [EMAIL PROTECTED]
adr;quoted-printable:;;1900 Market Street=0D=0ASuite 800;Philadelphia;PA;19103;U.S.A.
fn:Edward J. Dodson

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