# Home equity loan (also used in German; more rarely, home equity loan on loan-financed property)

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- Post ID: 594781
- Modified: 2023-07-25T21:02:36+00:00
- Language: en

## Definition

The loan in the U.S. that predominantly triggered the subprime crisis, in which a house serves as collateral but has already been financed by a loan - usually from another bank. The institution issuing the subordinated loan trusts that - real estate prices will continue to rise or - it will be able to securitize bundles of such high-risk loans, because they have a high probability of default, and - pass them on to other partners around the world. - The buyers of such securitized securities were also mostly banks, including many from Germany, which took such securities into their portfolios in reliance on a submitted favorable rating. - The second loan was then used by the borrowers (homeowners) primarily to buy durable consumer goods and cars or to go on world trips. In this way, the subprime crisis became inevitable. - See Absence Capitalism, Credit Default Swap Squared, Loan Liability, Limited, Home Mortgage Disclosure Act, Housing Bubble, Jingle Mail, Air Securities, Luxury Consumption, Mortgage Equity Withdrawal, Ninja Loans, Northern RockDebacle, Papers, Toxic, Payment-in-Kind Credit, Real Credit, Subprime Lending, Securitization Market, Lemon Trade, Twenty-Eight Credit. - Cf. ECB Monthly Bulletin, May 2013, pp. 59 f. (Developments in euro area residential property prices since 2000). Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent! University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec. Professor Dr. Eckehard Krah, Dipl.rer.pol. E-mail address: info@ekrah.com https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk https://www.jung-stilling-gesellschaft.de/merk/ https://www.gerhardmerk.de/

## Machine-readable

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