A recent release from his office explains:

“…Mike Haridopolos today called for hearings in Tallassee to investigate claims that after banks received hundreds of billions in federal bailout money they squeezed consumers and fraudulently or arbitrarily reduced Home Equity Lines of Credit (HELOC) to improve their own bottom lines.

‘I have heard the stories of this happening across our state and our country, and the courts are filled with lawsuits,’ says Haridopolos (R-Merritt Island). ‘This needs to be investigated because if true it’s outrageous. The very banks that are bailed out with taxpayers’ money then stick it to homeowners?’

Haridopolos is calling for hearings in Florida and is also asking that Congress investigate the claims of wrongful HELOC suspensions.

See Also:

How to Protect Your Credit in Case of a HELOC Freeze

Courthouse News Service reports:

“Yakas filed a class action, alleging breach of contract and unjust enrichment. She said Chase breached the HELOC in three ways: by failing to obtain an appraisal by a licensed appraiser, by using the unreliable AVM to assess her property value and by charging her a $20 annual fee after it suspended her credit line.”

It’s about time that someone stood up for HELOC borrowers’ rights. Lenders can certainly limit or even freeze HELOC lines if there is not sufficient equity remaining in a property. However, it is unfair to freeze HELOCs in batches or based on these so-called “automated valuations” that do not require any actual appraisals or personal considerations.

photo credit: The-Lane-Team

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HELOC Freeze Help

But, 2010 may be the year that frozen HELOCs begin to thaw.

PBS’ Nightly Business Report explains:

“As housing prices and the economy begin to stabilize, many lenders are writing lines again. They’re not the unbelievable deals they used to be, but they can still be a relatively cheap way to borrow. For example, it can be wise to pay for a new car with funds from a HELOC, since some auto loans charge far higher interest rates than HELOCS do.”

If your area wasn’t hit too hard with the real estate downturn or if you hold a significant amount of equity due to paying down your mortgage, you may be able to qualify for a low-interest HELOC. Give it a try…even if it didn’t look so promising last year.

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How to Qualify for a HELOC

Is February the perfect time to cut ties with big banks and look for a better match?

The Consumerist reports:

“You deserve a healthy relationship with a bank that values you as a customer, instead of jacking up interest rates, cutting your HELOC and your credit card, and refusing to adjust wacked-out mortgages.”

Big banks aren’t always bad. But, recent financial troubles have caused many financial organizations to make sweeping changes that affect everyone – both the responsible HELOC borrowers and the not-so-responsible borrowers. Many HELOC lines have been cut or frozen without personal consideration.

Local banks and credit unions may not always be better. But, at least customers have a good chance of talking face-to-face with someone who can consider their individual situation.

photo credit: joanna8555

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Negotiating HELOC Terms

Bankaholic reports:

“Nationwide Bank has about the best deal around on HELOCs — if you can get one…

Its line of credit is available in all states, carries no annual fee, and pays the first $750 in closing costs, including the appraisal. That should be enough to cover everything, everywhere except in New York and Florida.”

To qualify, homeowners must have significant equity and a credit score above 720. If the Nationwide program doesn’t work for you, check out local credit unions. Many are now offering record low rates on home equity loans for the most credit worthy customers.

See Also:

How to Get the Best HELOC Rates and Terms

How a HELOC Works

Reuters explains:

“Delinquent home equity loans — which represent E*Trade’s greatest exposure to loan losses — totaled $753 million in February, up 1 percent from the end of last year. However, the early-stage delinquencies were down 16 percent over the last two months.

“(E)arly stage delinquencies are showing signs of stabilization, particularly in home equity where they’ve declined year-to-date,” Fox-Pitt Kelton analyst David Trone said in a research note.”

Although the overall delinquencies HELOC loans and other equity lending products has increased, it looks like a growing number of defaulting borrowers have actually been able to catch up with their mortgages.

Is this the sign of a home equity turn around? Or at least the initial stages of a recovery?

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HELOC Essentials

Answers to Common  HELOC Questions

Mr. Mortgage reports:

“The rub here is that Wells ALREADY switched the terms to the 10.13% and the only way out is to ‘decline’ the offer by March 15th. It is very confusing. Of the hundreds of thousands of these that Wells may have sent out, how many will go unattended to? My guess is a large percentage. In the next statement that comes, these borrowers will see a payment increase of 150%! Think that may lead to some HELOC loan defaults? This is radical. This does not lead to warm and fuzzy feeling for the bank.”

Unfortunately, this is likely to come as a huge shock to a lot of faithful borrowers. It sounds like this notice is easy to mistake as a credit card offer or other junk mail item, when it is actually going to have a big impact on the recipient.

For most, HELOC rates are extremely low right now. But, like everything else during the past 12 months, this proves that nothing is guaranteed.

photo credit: RomanKetchup

See Also:

How to Negotiate the Best HELOC Rates

10 Most Important Questions to Ask Your HELOC Lender

NewsDay does a good job of explaining just what these design standards entail:

“Universal design is a concept that promotes accessibility, safety and ease of use, especially for older or disabled residents. Features range from nonslip flooring to rollout drawers and step-free entrances.

“There’s an increasing aging population of baby boomers and an aging population in general,” said Judy Pannullo, executive director for the Suffolk Community Council, a Hauppauge-based nonprofit. “That tells us there’s a need for universal design.”

Most home equity lines of credit can be used any way the borrower desires. But, some lenders feel that specified-use HELOCs are a smart way to promote a cause and help homeowners be more responsible with the money they borrow. (Sorry, there’s no using this line for a down payment on a sports car…)

photo credit: John Flinchbaugh

See Also:

5 Financially Sound Ways to Use a HELOC

How a HELOC Works

A recent Seeking Alpha article reports:

“For now, let’s realize that the JPM/WaMu combo has the highest concentration of 2nd lien loans (and Option ARMs) in the absolute worse housing areas in this country, CA, FL, and NV. Keep in mind that 2nd lien loans have diminished priority in terms of claims on assets, so if a house sells for 70% of its previous sales value, and there was a 70 LTV loan combined with a 80 CLTV (combined LTV) HELOC on top, the HELOC lender takes a 100% loss. Let me repeat that, “a 100% loss”.”

Some speculate that these mortgages keep the company vulnerable and more likely to respond with HELOC line cuts.
photo credit: TheTruthAbout…

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WaMu Goes Down – Bought by J.P. Morgan

WaMu Cuts HELOC Program

WaMu Cuts $6 Billion in HELOC Lines

The Associated Press explains:

“Many banks have made it harder for borrowers to obtain all kinds of loans over the last three months despite a $700 billion federal bailout program and a flurry of other bold moves to stem the worst financial crisis to hit the country since the 1930s…

For consumers, about 40 percent of banks reduced the size of existing home equity lines of credit, and roughly 35 percent trimmed credit card account limits.”

Those figures are huge. But, they may not come as a surprise to the thousands of borrowers who received line reduction or cancellation notices in their mailbox during the past year.

See Also:

Are Lenders Freezing Home Equity Lines Illegally?

Which Banks Are Freezing HELOCs?

HELOC Freezes Continue