This entry was posted on Monday, February 18th, 2008 at 3:28 pm and is filed under Changing Guidelines, Subprime Meltdown. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Pouring Salt in the Wound: Freezing Home Equity Lines Instead of SubPrime Rates:
As if tumbling real estate values, toxic loans, and rising foreclosures weren’t bad news enough, banks have begun freezing Home Equity Lines of Credit (Heloc), depriving homeowners the ability to draw on their remaining home equity when many need it most.
In recent years, the banks promoted Helocs by offering them like a free Happy Meal to consumers when they purchased or refinanced a home. Buying into the idea that a heloc could provide a safety net during difficult times, consumers often accepted.
ARE WE LAZY, OR IS THERE TOO MUCH FINE PRINT?
In its primer entitled What You Should Know About Home Equity Lines of Credit, the Federal Reserve Board notes:
Plans generally permit the lender to freeze or reduce your credit line under certain circumstances. For example, some variable-rate plans may not allow you to draw additional funds during a period in which the interest rate reaches the cap.
But if anyone bothered to read the fine print or noticed the Fed’s warning, few anticipated the perfect credit storm in which we now find ourselves.