I got a client an 80% LTV HELOC and they went and paid off the entire mortgage of a place in Hawaii that was more expensive debt. This client has some financial wherewithal and has subsequently paid down the mortgage to 35% in short order and likes paying off large components at a time. It will likely be at 0% in 18 months. After this the HELOC may again be tapped partially or in its entirety for future investment purposes. Why punish the good because the bad are stupid. Make the banks take a greater responsibility for the lending they do.
Again look at the rates they earn on personal LOC's. I have three available to me and I wouldn't be able to get an HELOC. But I can get a ton of personal LOC debt available to me at higher rates as well as $20,400 in potential credit card funds. Tell me where the real problem is and where the regulators should be focusing their attention.
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