According to some, former Federal Reserve Chairman Alan Greenspan may have foreseen the current housing crisis - including the current issues with home equity lines of credit.

Bloomburg reports:

“For homeowners, froth came in the form of home equity. As it was seen as easy “money on the house,” this bubble-inflated bonanza was mostly cashed out. Now millions are tapped out in their credit and savings kitties…

Greenspan, who wrote a 2007 report with economist James Kennedy on home-equity extraction for the Fed, found that American homeowners pulled more than $800 billion out of their properties, most of them going into even more debt to tap the bubble profits.

Now that the foam of a saucier time has gone flat, some serious debt reduction and saving are necessary.”

In 2005 Greenspan first spoke about housing “froth” before Congress. However, millions of home owners were so busy tapping out their equity via HELOCs, few took the time to listen.

See Also:

Inflation: Time to Rethink That HELOC?

5 Financially Sound Ways to Use a HELOC

Tags | Alan Greenspan, Federal Reserve, Heloc, heloc freeze, home equity line of credit, mortgage crisis