The days of using home equity like an ATM are over! Unfortunately you’re correct, new schemes abound and the desperate consumer falls victim. Schemes such as Pay Day Loans (I use the term “scheme” differently here. Though some people use Pay Day Loans properly, many fall victim to the high interest rates and find themselves unable to pay at which point the debt hole keeps getting bigger and bigger).

One homeowner went as far as vandalizing their own home (cabinets, doors, toilets…everything!). They took it all to TJ to sell it! The police was called but they couldn’t prosecute because although the home was undergoing foreclosure, it still legally belonged to them and they could do as they pleased.

A good play would be to go short retail on a move up (as the consumer uses their credit cards to keep on buying) and go long the consumer credit companies (which are more beat up than the retailers). As the consumer gets loaded up, they will use their money to try to pay off their credit cards and stop spending, thus hurting retail and making money for the credit card companies.