JUL 10, 2018
There’s condescension, and then there’s this.
CNBC has concluded that the reason you haven’t taken out a second mortgage on your house is because you didn’t know you can.
Nowhere, not once, do they mention that it’s a highly risky, often-variable-rate, generally irresponsible thing to do if you can at all avoid it.
Nowhere is the assumption that the responsible homeowner who has built equity in their home through consistent and timely mortgage payments has no need or desire to heedlessly burn all that equity by taking out a second huge loan.
And since you probably wouldn’t understand the in-their-eyes-post-doctorate-level idea of driving up your household debt levels to the absolute hilt for no reason whatsoever, they’ve deigned to spoon-feed you step-by-step instructions in an adorable little cartoon.
The basic tone and assumption of the article is telling. Only 1% of home equity is currently being made available to banks so they can double-dip on your mortgage interest? The response is not “Shrewd move, homeowners. Safe, sane, and smart.” It’s “These poor folks must not know they can! They must not know how!”
The article even goes so far as to call anyone who actually owns a percentage of their house and isn't fully in debt to their bank via primary mortgage as "rich".
Overall, just 1.17 percent of available equity was tapped in the first quarter of this year, the lowest amount in four years. Why? They may not know just how rich they are.
“I think the typical American doesn't have that level of awareness, they're not probably studying the numbers,” added Graboske. executive vice president of Black Knight’s Data & Analytics division.
Got that, homeowners? You're rich, but you don't know it. You don't have "that level of awareness." You have no idea how much this giant investment you've made is worth. You're "probably not studying the numbers."
Because if you were, you'd be assuming the good times would go on forever and be loading yourself up with as much household debt as the market would let you get your hands on.
This is nothing new. This sort of marketing is exactly what preceded the 2008 financial crisis and the housing market collapse.
And guess what tone the very banks would take with you if the credit markets seized up suddenly in a financial crisis, and you were heavily borrowed against your home equity loan?
You're immoral. You should feel shame. Nonsense.
Your bank loaned to you because a computer ran an algorithm that said it made mathematical, financial sense to loan to you based on some risk/reward profile that quantified your financial state, the housing market at the time, their projections of where the housing market would go, and any other factors they wished to consider.
Do you think a bank has any sort of moral crisis when they decide not to lend to a marginal family who desperately needs housing because their computer simply says not to? Of course not. And when they make their loans, they do so with full knowledge a certain number will default.
But when the tables are turned, and it's a very simple and clear financial decision for you to hand back the keys and walk away from your mortgage, you're a bad person.
Don't believe it for a moment. It's all just marketing bluster designed to guilt you into pointless, injurious, unnecessary financial servitude. You signed a contract saying you'd pay your monthly mortgage or the back would get the house back. You're simply opting for the latter, making the obvious and logical choice.
It’s no secret that CNBC is a non-stop, 24/7 PR network for Wall St., big banks, home lenders, duplicitous sub-prime lenders, and the usual regalia of liars who enrich them with nonstop advertising spots aimed at convincing you investing is too scary, too difficult, too complicated for you to do on your own.
They explain that terrible mortgages (or second, or third mortgages) you can’t afford are not just a great idea, but your very birthright as an American.
Even for them, this is ugly. If you’re not loading up on the choice of variable-rate debt of last resort, you’re a witless child who doesn’t know you can or doesn’t know how. So here’s a cartoon, simpleton, that even you can understand. Now get out there and use your new HELOC to buy that boat.
ORIGINAL SOURCE: Homeowners are sitting on a record amount of cash — and not tapping it by Diana Olick at CNBC on 7/9/18