Bank Ads Helped Spin 2nd Mortgages

Home equity loans, once desperate moves, now total $1 trillion
By Jason Farago,  Newser Staff
Posted Aug 15, 2008 11:59 AM CDT
A banner encouraging home equity loans is seen on the roof of a US bank, Thursday, June 14, 2007, in Alameda, Calif.    (AP Photo/Ben Margot)
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(Newser) – Until recently, borrowing against one's home was considered a desperate measure, but now it's commonplace. Since the 1980s, outstanding home-equity loans—once called second mortgages—have exploded a thousandfold to more than $1 trillion. The New York Times looks at how banks waged a concerted advertising campaign to transform Americans' attitude toward debt, enriching themselves while leading homeowners to financial ruin.

Banks across America made billions assuring customers that money was "hidden in your house." Now, for the first time since World War II, Americans own less than half of the value of their homes—a shift observers attribute to changes in the culture of debt. "Calling it a ‘second mortgage,’ that’s like hocking your house," said one Citicorp executive. "But call it ‘equity access,’ and it sounds more innocent."