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 “proprietary.” But he says customers who think the appraisal is erroneous may discuss their concerns with the bank. Bank of America is presently examining equity lines in areas of the country where home values have declined significantly, he says. It is also reducing lines of credit for borrowers whose home values haven’t declined significantly, but who haven’t accessed the line, he says.”

Did you catch that? They are planning on reducing HELOCs for borrowers whose homes haven’t declined significantly. This is a departure from the way line freezes were handed in the past, and Bank of America could be followed by other major lenders.

If you previously thought you were safe from the HELOC freeze because of market stability in your area, now is a good time to consider your options. The Bank of America spokesman said that the freezes would affect those who haven’t drawn on their lines. So, if you want to keep your line open, you may want to withdraw funds soon.

See Also:

Strategic Withdrawals to Avoid the HELOC Freeze

Which Lenders Are Sending Out HELOC Freeze Notices? 

The HELOC Automated Valuation Model

Tags | Heloc, heloc freeze, mortgage crisis