Before the bubble burst, Citicorp spent a whopping billion dollars on it’s “live richly” advertising campaign - encouraging homeowners to tap their equity via HELOCs.

The New York Times reports:

“The advertising campaign, which cost some $1 billion from 2001 to 2006, urged people 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 universally accepted, their image transformed by ubiquitous ad campaigns from banks.”

The ad campaigns can’t be blamed for borrowers’ poor decisions. But, it’s clear that they had some influence in shaping public opinion. In recent years, it’s been commonplace for people to take out home equity lines of credit for just about anything….vacations, shopping sprees, investing in a “friend-of-a-friend’s” business. You name it.

Now that home values have dropped, millions are regretting their poor financial planning. Americans now own less of their own homes than ever before.

The moral of the story: don’t rely on commercials urging you to “lighten up about money.” If anything, Americans need to take money more seriously.

See Also:

HELOC Foreclosure

How to Negotiate the Best HELOC Rates and Terms

Tags | Citicorp, Heloc, heloc crisis