Risky to buy stock with home equity
From Times wire reports
Too many house-rich Americans are borrowing money against their homes to play the stock market, the regulator of brokerages warned Wednesday.
In an alert to brokers, the NASD, formerly the National Assn. of Securities Dealers, reminded Wall Street that it has a responsibility to steer investors away from unsuitable financial strategies and to make sure they understand that their homes are at risk if investment returns do not cover new mortgage or line-of-credit obligations.
About 11% of gains from refinancings were plowed into the stock market and other financial investments in 2001 through mid-2002, up from less than 2% in 1998 through mid-1999, a Federal Reserve study showed.
