Earlier today the Federal Reserve cut the federal funds rate a quarter of a point, from 2.25 to 2. The prime rate, used to determine the majority of HELOC interest rates, generally mimics the federal funds rate. So, HELOC customers may see a slight interest reduction in their future statements. Some analysts speculate that this latest [...] [...more]
With the recent HELOC freezes, some borrowers have speculated that home equity loans are in decline. Surprisingly, this is not the case. Although it is currently more difficult to take out a HELOC, analysts seem to agree that these credit lines will continue to be a popular borrowing option. Consider this expert discussion from a recent [...] [...more]
I’ve posted before about the option of withdrawing HELOC money as a safety net. Many HELOC lenders have been reducing or freezing lines, so in some cases it makes sense to preempt this possibility by withdrawing money early. An Early Show article disagrees with this strategy, claiming that HELOC “hording” is reactionary and a poor financial [...] [...more]
It’s no secret that bonds backed by HELOCs have been experiencing issues. But, one bond has done particularly poorly - so poorly that 81 of every 100 borrowers are expected to default on their loans. Portfolio.com explains: “…It’s not uncommon for bonds backed by home-equity lines to have recovery rates of zero when there is a [...] [...more]
From the thousands of customers affected by the HELOC freeze, many personal stories have emerged. Magazines, blogs, and newspapers have all shared tales from these surprised borrowers. Here are a few of the most notable: - A couple had worked towards adopting a child for years. When nearing the end of the process, their HELOC [...] [...more]
For the past few months, HELOC freeze notices have been sent to borrowers living in declining real estate markets. Now, it seems that all HELOC borrowers are at risk. Consider this blurb from a recent article on The Street: “Terry Francisco, a spokesman for Bank of America, wouldn’t discuss the bank’s appraisal process, citing it as [...] [...more]
Due to recent cuts, the prime rate is very low right now (5.25%). That means most HELOC borrowers are paying less in interest every month. Some financial advisers have suggested that the rate cuts make today a smart time to take out an adjustable rate home equity line. However, not everyone agrees. While HELOC rates are [...] [...more]
If your HELOC has been frozen, getting your original limit back is a long shot. However, you can try to “thaw” your frozen line by requesting a new appraisal. A recent CNN Money article explains: “Call the lender’s customer service department and ask if it has an appeals procedure. “You generally will need to demonstrate that [...] [...more]
Last month we published an article identifying the lenders who were canceling or freezing HELOC lines. Now, it’s time for an update. Lenders Freezing HELOC Lines Countrywide (leading the way since January with over 120,000 notices sent) Wachovia (started sending most letters earlier this week) Washington Mutual IndyMac Bank Capital One (Greenponing Mortgage Unit) Bank of America Chase CitiGroup National City Suntrust USAA Federal Savings It’s important to [...] [...more]
One of the biggest complaints of homeowners hit by the HELOC freeze is that most lenders have not done new property appraisals. Instead, they’ve determined lower property values by using the automated valuation model (AVM). Today, Tanta of the popular Calculated Risk blog explained that homeowners should not be surprised - especially because most HELOCs were [...] [...more]
