Final answer:
Banks actively compete for home equity loans that became popular due to the subprime loan crisis and the resulting housing bubble. This led to the decline in home equity during the financial crisis of 2007-2009.
Step-by-step explanation:
Banks actively compete for home equity loans that became popular with consumers as a result of the subprime loan crisis. In the past, a prospective home buyer went to a local bank for a mortgage loan. However, changes in finance and banking laws in the 1990s and early 2000s allowed lending institutions to securitize their mortgage loans and sell them as bonds, making highly risky loans more attractive to lenders. This led to the housing bubble and the financial crisis in 2007-2009, which caused the decline in home equity.