David, I had not thought of this, but it is a great idea especially in Hurricane country like Florida. But have quick access to cash is a good idea no matter where you live.

George... I agree... I just think sometimes people need a little sticky note every now and again telling them specific uses for such products!  Thanks!

David... this is some great advice, especially from talking to past clients that I have helped in Florida. AGain, good awareness, especially with the Hurricane season approaching.

David,  Really great advice. As you know I was born and raised in south florida and have been through many hurricanes. 

David,

I myself has some misinformation on Equity line's, of course now I think they are a huge help and very good to have as well...

Tom

i never thought of that.

maybe we can get a plug at the hurricane seminars. 

David, great forward thinking for hurricane season.  If there is a storm that goes through, does a bank have any right to put a hold on a HELOC and not release funds to a customer?

HI David,

Good Post! I hadn't yet read your post and I posted a similar one yesterday!  I am new to AR so I hadn't searched all the groups yet!!!  No worries!  I guess it just shows that we all have hurricanes in our heads!

Leah asks a very good question, I honestly didn't think about that! Hmmmm, maybe worth checking it out...I'm thinking that maybe it would depend on the severity of the damage etc....

what do you think??

Have you by chance read the reasons a bank can close a HELOC?  One reason is if they fear their collateral has been damaged or destroyed.  Now I know the bank tells you "oh we won't close them down" but they can and if I were a betting man I'd bet that if your house got damaged or destroyed in a well publicized hurricane they would shut down those HELOC's on houses that might be in the path until they can verify if their collateral is okay.  I know I would certainly be leery of recommending these as liquidity in the aftermath of a hurricane and have it not be available.

Just a thought.

Actually, I've been through four major hurricanes so far since I moved here 3.5 years ago... I moved into my house in between two biggies...

I have yet to hear of a lender who made such a negative move during a State-sponsored and nationally sanctioned State of Emergency.  With FEMA and Insurance companies working their roles... lenders have at most held monies in escrow for repair so a homeowner cannot run away with the money and not fix the home.

I see you are near Tornado Alley - similar situation.

thanks though

David,

I wasn't talking about repairs and the like I was talking about having your clients liquidity tied up in a HELOC that they may not be able to access in their time of need. 

So if I understand what you are saying is that in the aftermath of a Katrina type disaster if you had a HELOC and your house was in the path of the storm and you couldn't live in it you could pull the amount of your remaining credit limit out of the HELOC?  The banks didn't close down access to them after the storm?

I find that hard to believe. 

Yes I am in Tornado alley the difference here is homeowner's insurance covers tornado damage where largely hurricane damage is deemed to be flood damage so homeowner's inurance doesn't cover it and the NFIP only covers $300,000 - just ask Senator Trent Lott, he had a free and clear $700,000 house that was destroyed in Katrina that he only got $300k from flood insurance on.  So if he would have had a $700,000 HELOC the bank would have let him write write a $700,000 check the day after Katrina to access his wealth?

Not trying to be argumentative here, I just wouldn't trust my client's liquidity to a HELOC when the bank can close it down for many reasons.  I had some conversation with Todd Ballenger on this because he is big on HELOC's so he called his banks and they said even though they could close them for many reasons they couldn't think of a reason they would close the line.  That may be the case, but if a bank had thousands of HELOC's in New Orleans I can't believe they wouldn't shut those down in a heartbeat- bad publicity or not and I certainly wouldn't want my client to be counting on having that money in their time of need.

had to take this to the phones people...

My point - Katrina has to be seen as Force Majeure... there is nothing to say but utter devastation and everyone in its path was hurt and only a few actually rebuilt.  We can't use it as a case study for all mortgages and helocs in hurricane areas.

Kurt's response - understood

Kurt's Point - there could be a reason that the bank stopped funding of a line due to extreme circumstances

My response - understood and plausible but have not seen that as an issue here in Florida

My Points - if you don't have it, you're not going to get it.... having it ahead of time makes sense

Kurt's response - understood and agreed

Mutual Recognition and Agreement - you should have this... there is no way to know if a bank will have to have an emergency closure of the ability to draw on the line or not.  In which case, it is advisable to draw the line out temporarily for the hurricane to have access to the funds one way or another.  After damages are settled, the remainder can return to the line to bring down the debt.