Believe it or not, some very large banks and mortgage companies are freezing equity lines and not allowing any additional draws. MSN money has the article here. I know why the banks are doing this, but I still find it offensive. Banks are concerned about future losses from clients who get "upside down" in their homes. They also are guarding against any borrower looking to cash out and walk away from the home. There are even some more complicated issues over a concept called rapid amortization. That concept is discussed in detail on the Housing Wire here.

I have an equity line on my home and the thought of the bank "freezing" it both scares me and makes me mad. Here is what I plan to do to stay out of the bank's crosshairs.

1. Avoid maxing the line out. Anytime you get to the limit of the line, the bank will consider it a greater risk

2. Make more than the minimum interest payment. Show the bank that you have the income left to make extra payments.

3. Pay a few days before the payment is due.

Hopefully the banks will keep this practice contained to California and Florida. But I plan to be prepared if they don't.