Got a second mortgage you can’t pay? It’s yours forever.The US Supreme Court today ruled that many second mortgages can’t be discharged in bankruptcy, regardless of how little the home they were borrowed against is worth. This means that while the banks that made the loans will get their principal plus (often high) interest, while many low-income homeowners are, well, screwed.

I remember meeting a programmer who, during the boom, took out a hefty second mortgage on his McMansion, used the funds to buy a luxury speedboat and (very) large-screen TV, among other things, then declared bankruptcy and discharged all that debt. It infuriated me (and not just because he voted Republican). After hearing about this SCOTUS ruling, I got curious – what did most borrowers spend the proceeds from their second mortgages on? Were most responsible or, like this McMansion borrower, using the money to buy toys? I haven’t been able to find data on this (yet), but it would make a fascinating study.