Banks make home equity loans slightly easier to get with looser application requirements

House made of coins

The word responsibly pops in my mind whenever I think of home equity loans.

If you're responsible, it can be a good move. But if you're not, it can be disastrous.

I just saw a June report by the Office of the Comptroller of the Currency that says banks are making home equity loans easier to get.

According to the report, 18% of lenders loosened underwriting standards over the year ending in February 2012 by doing things like reducing the loan-to-value ratio and credit scores borrowers need to win approval.

Fewer lenders are tightening their underwriting requirements, as well. According to the survey of 87 banks, only 14% said they tightened requirements.

That's a big difference from the height of the housing crisis in 2009, when no lenders were loosening requirements and 78% had tightened standards.

In fact, the number of banks tightening their standards has steadily decreased since 2009 – by 64%.

More lenders are also keeping their requirements the same. This year, 68% of banks kept their underwriting standards unchanged, up from a low of 22% in the recession year of 2009.

The report says economic outlook, competition and risk appetite all contributed to banks' easing of lending standards.

That's great news if you're in the market for a home equity loan. But it's important to borrow responsibly. Using the money for home improvements and education is a plus. Flat-screen TVs are a minus.

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