Brief

Since the refinancing boom began in 2001, American homeowners have cashed out more than $330 billion in home equity to cover rising living expenses and credit card debt, putting at risk their most important asset – their home. Due to ever-increasing financial pressures, families often depend on high-cost credit as a way to bridge the gap between stagnant or decreasing incomes and rising costs just to live. This third brief in the Borrowing to Make Ends Meet series examines rising debt and debt burdens, as well as the consequences of leveraging equity through credit card debt.

September 5, 2005

In This Report, You’ll Learn

  1. 1

    The scope of the refinance boom.

  2. 2

    A look at mortgage fraud as a contributing factor to today’s inflated housing market.

  3. 3

    Recommendations to address credit card industry practices and help families protect their nest eggs.

  4. 4

    Recommendations to address real estate industry practices to protect Americans from appraisal fraud.

  1. 5

    A personal story illustrating the challenges of making ends meet by incurring credit card debt and refinancing a home.

Key Takeaway

Protecting Home Equity

To ease the burden of high cost credit card debt, some families look to cash in their homes’ equity to pay down consumer debt and finance basic needs. Policy changes at the federal level could help homeowners pay down their debt at reasonable rates, over reasonable amounts of time.

Amount of Equity Cashed Out Between 2001 and 2003 (in billions of dollars)

Findings & Stats

Statements & Quotations