Finding collateral for credit card borrowing caused second mortgages to explode as homeowners borrowed against their equity to finance their borrowings. This had the twofold effect of increasing their debt, including mortgage, repayments as a proportion of their incomes. It will be to no avail. A great deal of misery is what these families can now expect and much of blame should be sheeted home to Greenspan. The sheer magnitude of the figures makes it difficult for many to get a handle on the situation.
Mortgage debt is one such figure.
To say this situation is troubling is to put it mildly. As is to be expected, most commentators are drawing the wrong conclusions from these grim figures. They reckon that falling real estate prices could reduce equity to the point where consumers could no longer borrow to pay off debts. This is not a problem but a symptom. The same process that created the debt situation is the same one that inflated property values against which additional debt was accumulated.