Home Equity Loans: Your Brush Is A Little Broad

You paint the financial-services and banking industries with the same broad brush (" `It's like being on the edge of a precipice,' " Finance, July 6). For "nonbank" lenders, such as Beneficial, which are disciplined in their loan-to-value standards and use the ability of the borrower to repay as the primary loan critierion, the current decline in real estate values has not significantly affected the safety of home-equity loans.

Beneficial's experience proves that middle-class Americans are, in the overwhelming majority, prudent borrowers who tap into their home equity after careful thought. Tapping into home equity is one of the best ways homeowners can get a significant amount of consumer credit at substantially lower interest.

You also note that delinquency rates are being questioned. You are partly correct. The national statistics on home-equity lending are abysmal. But Beneficial, with a portfolio of over $5 billion in real-estate-secured loans across North America, maintains accurate statistics. Our total delinquency rate for such loans on May 31 was 2.71%, less than the previous year. Our total real estate losses this year are averaging 0.46% on an annualized basis, also less than last year.

Finn M.W. Caspersen, Chairman

Beneficial Corp.

Wilmington, Del.

The industry is playing Russian roulette, as are homeowners. If we don't recognize this soon, and if higher interest rates are erroneously used to fine-tune inflation, home-equity borrowers will be the first ones to suffer.

Stanley Greenstein

Executive Vice-President

Mortgage Clearing House

New Hyde Park, N.Y.

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