HELOC's are being frozen

Mortgage and Lending with Liberty One Lending

I am hearing more and more stories from home owners who are going to use their home equity line of credit (HELOC) and are discovering that they have been either cut or completely frozen and cut by their bank. Believe me, it is happening here and often in Phoenix, Tempe, Scottsdale and even Fountain Hills.

If the above (bad) news is a surprise to you. I am sorry to be the one tho tell you that , Yes, in fact, banks have the right to shut down your line of credit for almost any reason. however, specifically, in decline of your home value. It is somewhere in the small print, that we all should read, but never do. Phoenix Arizona lenders freezing Home equity line

Large lending institutions are constantly, running large computer programs through their portfolio of loans evaluating risk. What criteria they use is not public knowledge.

However, it is safe to say that on an hourly , if not minute by minute basis, banks are analyzing the subject property's area, recent sale prices, active days on market of homes, supply of homes on the market, foreclosures, short-sales, unemployment, food and energy prices effect to derive present and future value of the home and its risk pertaining to the owner based upon the home owners past and present credit situation.

Unfortunately, the bank does not need to provide a reason or explain why they cut your HELOC. They just send you a letter.


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The Friendly Home Team
Realty Pro Oregon, LLC - Beaverton, OR
Brokers - Oregon / SW Washington Real Estate

My parents own a 400,000 home free and clear and had a HELOC on it for $100,000 and the bank shut all of their clients HELOCs off no matter value or credit score. My parents were just about to take some money out to remodel and now are having to rethink it.

It is amazing how quickly things can change, so don't plan on it or it may not be there.

Todd Clark, Helping Families Home - www.IFoundYourNewHome.com

Sep 27, 2008 02:07 PM #1
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