Real Estate Blog - No Cost HELOCs Still Alive and Well in Oregon

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No Cost HELOCs Still Alive and Well in Oregon

Based on the number of inquiries coming in, people seem to be out looking for replacements for the many HELOCs that have been frozen by lenders this past year - lenders such as Washington Mutual, Citi Home Equity, National Home Equity, Countrywide, and the latest lender, Indymac.

There are still home equity lines of credit and equity loans available in many areas, although they are tough to come by in California, Nevada and Florida right now. Many of these programs require the borrower to pay their own closing costs, but there are still no cost lines of credit/equity loans available, where the lender pays all "3^rd party fees" associated with the transaction, such as appraisal, escrow, title, and recording charges.

My question of the day is:

For the Borrowers who have had their lines of credit frozen and are now looking to find a replacement HELOC, shouldn't the existing lender who is being paid off waive their Termination Fee?

Most of these Home Equity Lines of Credit require the borrowers pay a $350-500 termination fee, or repay any 3^rd party fees the lender paid, which could amount to roughly $1,500-2,500.

Getting through to ask this question of Indymac is impossible with the recent FDIC take over of this organization. Do any of my fellow Active Rainers know the answer to this question? Your comments on this are greatly appreciated.

See you out there!

Karen Cooper - OR/CA Mortgage Consultant - www.Quality4Loans.com

Karen Cooper - OR|CA Mortgage Consultant - www.Quality4Loans.com
Providing high Quality, Professional, Ethical service to Oregon and California home buyers and owners since 1983. Whether you are taking out your first home loan or your fiftieth, for your home, your second home or for investment, put my knowledge and expertise to work for you.

Posted by Karen Cooper-Mtg Banker|Broker Ashland|Medford on 07/17/2008 10:35 AM

Comments (7)

indymac, countrywide, home equity, line of credit, loan, oregon, california

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7 Comments on No Cost HELOCs Still Alive and Well in Oregon

JUL

2008

Interesting question. You should be able to get the answer from the other banks. IndyMac may never answer again. I went through the S&L melt down in the 80s and if this is anywhere near the same, no one will ever know who is doing what.

Fred - I entered the business in 1983, so saw the same S & L crises, and again in the early 1990s. I'm guessing those crises were as severe as what we are seeing today, but this one had a much greater volume of transactions. Can't wait to see what lessons we come away with from this one. My feeling is it will be "back to basics". Thanks for stopping by.

Karen,

I actually worked for a S&L during the 80s and had the FSLIC come in one day and close us down. It is an unnerving experience, to say the least. My heart goes out to the IndyMac people.

I never worked for a S & L during the last crisis, but now we have some new issues.

JUL

2008

Krista & Fred - I worked for World Savings when I first entered the business in 1983. A lot of our loan officers came from Great Western or Home Savings, having been laid off when they were getting close to earning pension/retirement. Others came from these companies later as they closed their doors. This was very tough on these 50-60 something folks whno had to start over again when they were looking to retire within 10 years - a much more forward thinking society than we see today. Management was permeated with people who had previously worked at Xerox, who had fabulous corporate training/experience, but were let go during "cost reduction lay offs" and when a high-level manager brought in their own team. Yes, we have new issues we face in our industry today, but some things in the corporate world remain the same...

Thank you both for commenting.

To answer your question about waiving early termination fees, I'd say it varies by lender. Many of my National City Home Equity clients are frozen out of their HELOCs right now. All were already past their early termination clause, but we did get NCHE to waive the annual fee (and even credit it back to their accounts) while we work on getting a new HELOC in place. I would imagine that if HELOC lenders are so concerned about their risk that they're freezing accounts, they would be more than happy to waive the termination fee if the risk they fear so much is being removed from them by virtue of a payoff.

Dave - Those are great points. Why pay annual fees for HELOCs that cannot be used? Off to go dig out my HELOC statements to see if WE paid...

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