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Bank of America Wins Supreme Court Case, Could Help Boost Lending

home equity

The U.S. Supreme Court ruled this week that banks may pursue home-equity borrowers for payments in bankruptcy – a practice known as lien stripping – in a case involving Bank of America.

As a result of the ruling, experts are suggesting that the unanimous decision may lead to even more home-equity lending by reassuring lenders that they can recoup losses in the even of a Chapter 7 bankruptcy filing.

“The risk for all lenders is less today than it was the day before the court’s decision, which means they’re going ot be more willing to grand someone a home-equity loan,” says Thomas Norton, president of Norton Group in Princeton, New Jersey. “This ruling means if someone hits a bump in the road, lenders are more likely to get some of their money back.”

Image via flickr/401(K) 2012

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