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Ford announced that it is laying off 30,000 workers.  That means that 30,000 people will lose their ability to make timely mortgage payments very soon.

In the dust of the layoffs, two classes of Ford employees will emerge.

1. The class that set aside an emergency fund for "rainy days" like this, and maybe even worked with a financial planner.
2. The class that didn't.

Both groups must now face the rough months (years?) ahead. 

Some Ford workers will turn to their home's equity for a lifeline, either opening a home equity line of credit or remortgaging their home for "cash out". 

Unfortunately, those loan applications will get denied because banks don't like to lend to people that need money. 

The banks will deny the applications of Ford workers because without a job, the workers have no means by which to pay back the bank. 

No matter how much equity, or how many "extra" payments were made before the job loss, the bank will not approve a mortgage for a homeowner without a job.

Yesterday, Ford's employees could have closed on a new mortgage. 

Today, they can't. 

Not only will home purchase activity stall in Detroit, but millions of dollars in home equity just got trapped on paper.

This story illustrates why it can be prudent for homeowners to:

1. Set up a home equity line of credit just for emergencies
2. Keep equity separated from the home as much as makes sense
3. Have an emergency fund to handle life's curveballs

Banks won't lend to people that need money -- only people that want it.  Plan ahead so that if you ever lose your job, you're not left wondering how you're going to pay your mortgage.

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Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.