You would think that given the recent rash of foreclosures and the ripples in the subprime lending industry, lenders would be a little more conservative when it comes to handing out loans. In fact, New Century Financial Services, the poster child of the subprime lending industry, just filed Chapter 11 bankruptcy and will be letting go of 2300 employees. Well, I just saw an advertisement by Ditech in which they were promoting their Freedom Loan. With Ditech’s Freedom loan, you can get up to a 125% loan on the value of your home in the form of a home equity loan.
Do you really need a home equity loan up to 125% of your home’s value? If you have so much debt, you probably want to take a serious look at your debt and the steps your taking to reduce it. If you don’t have so much debt, you should take a serious look at why you would want such a large loan. Either way, pimping out your 125% loan in a time when people are talking about bailing out foreclosures is probably a risky thing to do, especially if the borrowers fall behind… then you’re the company that offered a 125% loan after subprimes went under.