Equity mortgages have exploded do to the fact that rapid growth of housing in the late 70’s to current, and combined with the FHLBB rule change that allows S&Ls to make second mortgage loans. This has opened a potentially large loan market. Prior to 1979, Savings and Loans were not permitted to make second mortgage loans. Thus, a homeowner who wanted to borrow against the equity in his or her home would either refinance with a new and larger first mortgage or leave the existing first and obtain a second mortgage loan from a specialty lender or mortgage broker. Today, a Savings and Loan can make a second provided the amount of the first and the second combined does not exceed 80% of the appraised value of the property. Thus a home worth $100,000 with a $30,000 mortgage balance would be eligible for a $50,000 equity mortgage.
Equity To Alternative Financing