Thursday, August 12, 2010

Borrowers Refuse to Pay Billions in Home Equity Loans -

Voltron says: This is why Wells Fargo is bankrupt many times over


The delinquency rate on home equity loans is higher than all other types of consumer loans, includingauto loans, boat loans, personal loans and even bank cards like Visaand MasterCard, according to the American Bankers Association.

Lenders say they are trying to recover some of that money but their success has been limited, in part because so many borrowers threaten bankruptcy and because the value of the homes, the collateral backing the loans, has often disappeared.

The result is one of the paradoxes of the recession: the more money you borrowed, the less likely you will have to pay up.

Even when a lender forces a borrower to settle through legal action, it can rarely extract more than 10 cents on the dollar. "People got 90 cents for free, It rewards immorality, to some extent."

"Anything over $15,000 to $20,000 is not collectible. Americans seem to believe that anything they can get away with is O.K."

...85 percent said they would default and worry about the debt only if and when they were forced to.

"I'm kind of banking on there being too many of us for the lenders to pursue. There is strength in numbers."

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