The sub-prime mortgage debacle continues to take its toll, not only in the US, but worldwide. The ramifications are huge, most especially for those individuals who borrowed to buy a home - now, most probably already re-possessed or likely to be some time soon.
"Live Richly" was the catch-cry of the banks in the US as they persuaded those who could probably least afford it, to borrow monies well beyond their capacities.
The IHT explores and explains how the whole thing has both imploded and exploded:
"Live Richly"
That catchy slogan, dreamed up by the Fallon Worldwide advertising agency, was pitched in 1999 to executives at Citicorp who were looking for a way to lure Americans to financial products like home equity loans. But some in the room did not like it. They worried that the phrase would encourage people to live exorbitantly, says Stephen Cone, a top Citi marketer at the time.
Still, "Live Richly" won out. The advertising campaign, which cost about $1 billion from 2001 to 2006, urged Americans to lighten up about money, and helped persuade hundreds of thousands of Citi customers to take out home equity loans - that is, to borrow against their homes. As one of the ads proclaimed: "There's got to be at least $25,000 hidden in your house. We can help you find it."
Not long ago, such loans, which used to be known as second mortgages, were considered the borrowing of last resort, to be avoided by all but people in dire financial straits. Today, these loans have become widely accepted in the United States, their image transformed by ubiquitous ad campaigns from banks.
Since the early 1980s, the value of home equity loans outstanding has ballooned to more than $1 trillion from about $1 billion, and nearly a quarter of Americans with first mortgages have them. That explosive growth has been a boon for banks. Banks' returns on fixed-rate home equity loans and lines of credit, which are the most popular, are 25 percent to 50 percent higher than returns on consumer loans over all, with much of that premium coming from relatively high fees.
However, what has been a highly lucrative business for banks has become a disaster for many borrowers, who are falling behind on their payments at near-record levels and could lose their homes. The portion of people who have home equity lines more than 30 days past due stands 55 percent above its average since the American Bankers Association began tracking it around 1990; delinquencies on home equity loans are 45 percent higher. Hundreds of thousands are delinquent, owing banks more than $10 billion on these loans, often on top of their first mortgages.
None of this would have been possible without a conscious effort by lenders, who have spent billions of dollars in advertising to change the language of home loans and, with it, Americans' attitudes toward debt."
"Live Richly" was the catch-cry of the banks in the US as they persuaded those who could probably least afford it, to borrow monies well beyond their capacities.
The IHT explores and explains how the whole thing has both imploded and exploded:
"Live Richly"
That catchy slogan, dreamed up by the Fallon Worldwide advertising agency, was pitched in 1999 to executives at Citicorp who were looking for a way to lure Americans to financial products like home equity loans. But some in the room did not like it. They worried that the phrase would encourage people to live exorbitantly, says Stephen Cone, a top Citi marketer at the time.
Still, "Live Richly" won out. The advertising campaign, which cost about $1 billion from 2001 to 2006, urged Americans to lighten up about money, and helped persuade hundreds of thousands of Citi customers to take out home equity loans - that is, to borrow against their homes. As one of the ads proclaimed: "There's got to be at least $25,000 hidden in your house. We can help you find it."
Not long ago, such loans, which used to be known as second mortgages, were considered the borrowing of last resort, to be avoided by all but people in dire financial straits. Today, these loans have become widely accepted in the United States, their image transformed by ubiquitous ad campaigns from banks.
Since the early 1980s, the value of home equity loans outstanding has ballooned to more than $1 trillion from about $1 billion, and nearly a quarter of Americans with first mortgages have them. That explosive growth has been a boon for banks. Banks' returns on fixed-rate home equity loans and lines of credit, which are the most popular, are 25 percent to 50 percent higher than returns on consumer loans over all, with much of that premium coming from relatively high fees.
However, what has been a highly lucrative business for banks has become a disaster for many borrowers, who are falling behind on their payments at near-record levels and could lose their homes. The portion of people who have home equity lines more than 30 days past due stands 55 percent above its average since the American Bankers Association began tracking it around 1990; delinquencies on home equity loans are 45 percent higher. Hundreds of thousands are delinquent, owing banks more than $10 billion on these loans, often on top of their first mortgages.
None of this would have been possible without a conscious effort by lenders, who have spent billions of dollars in advertising to change the language of home loans and, with it, Americans' attitudes toward debt."
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