Oh Boy! Now You Can Use Home Eqty Like C-Card! - Posted by Vic

Posted by Tony K.(Miami) on February 12, 2001 at 21:22:34:

This thread reminds me of a line in the movie “Oscar” with Sylvester Stallone where he is a gangster going clean and the bankers refuse to put him on the board and he mentions how he is a gangster but the bankers are the real crooks beacuse they want his money but will not put him on the board. Well I agree with you and Sly the bankers are the crooks as they smile at you aith their big stupid grin when you go to ask for an explanation. I guess that might be why Creative real estate seems to appeal to so many people.

Oh Boy! Now You Can Use Home Eqty Like C-Card! - Posted by Vic

Posted by Vic on February 10, 2001 at 21:44:11:

Hey everybody,

I just ran across this & thought you’ll might find it interesting. Just when you thought people couldn’t find any new ways to get themselves into more debt, lo & behold, here comes a new way.

According to this article, Wells Fargo Mtg & Countrwide plan to start letting certain people use the equity in their home just like a credit card. Go out to dinner, just pull out your old equity debit card & presto, you’ve now just added $75 to your loan balance.

Not sure what to make of this right now. It certainly could make obtaining preforclosures with equity in them a lil more difficult. But then on the other hand, it may lead to more foreclosures, with people accumulating debt that they may not be able to make the payments on.

Here’s the link (sorry I don’t know how to make it a hyper link):

Debit cards are causing consumer problems… - Posted by Jack

Posted by Jack on February 11, 2001 at 03:05:30:

Hello Vic,

Sounds like the bankers have figured out a way to cut losses on unsecured credit card debts.

And speaking of “cards.” I read where the debit cards are causing checks to bounce on bank customer accounts. It seems that the oil companies request that the banks sequester funds to hold back for assurance of payment. On $1.00 up to filling your tank with gas, some banks hold $100.00 or more dollars for 5 days before those funds are cleared. That practice is causing customer checks to bounce. On top of that, the poor customer has to pay a bounce charge on both ends — the bank and the merchant. —Jack

This is all well and good… - Posted by Traveler

Posted by Traveler on February 10, 2001 at 23:44:20:

but I’ve got to believe the IRS is going to wise up eventually. As I understand the tax code, the write off extends to mortgage interest paid on purchase money for your primary or secondary residence. Doesn’t extend to cars, jet skis, boats, Chateau Montrachet and other things you may want to buy through churning the equity in your home. I know the IRS greed is there. Just wondering how long until the IRS smarts catch up so the Treasury boys can give the Executive and Legislative branches a little more lucre to throw around.

If I’m wrong on the code I’m sure someone can help me out here.

Re: Oh Boy! Now You Can Use Home - Posted by Houserookie

Posted by Houserookie on February 10, 2001 at 23:36:35:


This is good reading. I love it how the marketers
are sellling tax deductions and “good overall” for

But they seldom detail the human bad habits.
You can bet there will be more foreclosures.

The problem is little equity.

Maybe it’s time to focus on finding investors to
buy mortgage contracts at discounted rates?

That’s probably the only way to buy your way into

If the equity card concept is bought, what will
happen to the 125% LTV loans?

And which banks will take a third position?

The originator of the first and second loan will
have secured themselves prime real estate.

Interesting concept.

I heard this also. [nt] - Posted by SusanL.–FL

Posted by SusanL.–FL on February 13, 2001 at 15:22:34:


Re: Debit cards are causing consumer problems… - Posted by WayneMD

Posted by WayneMD on February 12, 2001 at 06:41:50:

I once asked a banker about bounced check charges and he said his bank would cover up to 8 bounced checks a day @$27 per bounce. “You’re treating bounced checks as a source of revenue?” I asked. “Absolutely,” was his reply. Yes, indeed it is criminal what they do. But respectably criminal. ahem.

Re: Debit cards are causing consumer problems… - Posted by Vic

Posted by Vic on February 12, 2001 at 24:32:45:


I didn’t know that banks were holding funds up to $100 on gas debits. That’s amazing! How can they get away with that? If that is indeed a routine practice, or something that is catching on, then that would indeed be cause to be concerned.

The banks never stop searching for ways to get money. In my opinion, banks are a lot like extortionists when it comes to fees. They’re just ridiculous. My bank now charges 26.50 for a bounced check. That’s criminal!!!

As people find more & more ways to get themselves into debt their credit is going to get worse & worse.

If ever there was a need for regulation, it would be for banks to be regulated.

It seems when banks issue credit to people so easily, & then have those loans go into default, they then want to increase fees on everyone else. This kind of practice needs to be stopped.


Re: This is all well and good… - Posted by Vic

Posted by Vic on February 12, 2001 at 24:35:23:


I’m sure if these loans become popular, you’ll see the IRS act with speed never before seen. I agree with you, it’s not likely the IRS would continue to allow this as a write off. I guess we’ll find out though.


Re: This is all well and good… - Posted by Nate

Posted by Nate on February 11, 2001 at 12:34:14:

My understanding is that a home equity loan of up to $100,000, provided the combined LTV does not exceed 100%, is deductible regardless of the purpose for which the cash is used.

If you are above 100% LTV, it is NOT deductible – although this is not enforced much. In the future…maybe??

Re: Oh Boy! Now You Can Use Home - Posted by WayneMD

Posted by WayneMD on February 12, 2001 at 06:44:56:

If I am not mistaken, the only tax deduction that can be taken is for the original value of the house, not on appreciation. In other words, you cannot deduct the interest on the appreciated portion of the loan as described in the article.

H-Rookie, You Bring Up Some Interesting Points - Posted by Vic

Posted by Vic on February 11, 2001 at 02:09:21:


You bring up some interesting points that I hadn’t even thought of.

Namely, will it be a second mtg or part of the first?

You’re also right about the human factor. I mean most people with common sense know that if the credit’s there, like it will be here, that people are going to use it. I wonder how long it would be before the banks have to discontinue these programs because of all the money they’ll be losing on the foreclosures.

Also, if a bank is willing to loan up to 100% of the value of the house, why don’t they just issue a 100% loan on just the value of the house only? I imagine it’s because they can get more interest on that second (if that’s what it will be).

I can just see the lawyers lining up now for the class action lawsuits alleging that the banks are at fault because they made the credit too easy for the buyers, who can’t protect themselves from themselves. You know it would never be the buyer’s fault, only the banks.

Another point to consider too is what happens when the value of the house goes down 10%. Now the bank has a 110% loan. How many of them can you foreclose on before going out of business?

You’re right there are so many questions to be answered. It’ll be interesting to see how it plays out.