A mericans of all income levels have increasingly turned in tough times to the equity in their homes, using it to back relatively cheap, tax- advantaged loans. Home equity loans, which totaled an estimated $420 billion at the end of 1997, have also been widely used to finance the accoutrements of an upwardly mobile lifestyle-home improvements, hefty college tuitions, and sports utility vehicles.

Within the home equity market, though, there is a clear economic divide between the generally upscale users of standard home equity lines of credit and loans and those with blemishes on their credit records who take out subprime loans.

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