Is your home equity line of credit at risk for a line reduction or freeze? There’s a lot of factors that may come into play (your lender, your location, etc), but banks do have to meet legal obligations before taking away anyones home equity line.

The Street recently published an article explaining the biggest risk factor:

“A bank can freeze an existing HELOC if the amount of equity remaining in the home, as measured by the difference between the credit limit and the home’s value, declines by half. Say you own a $200,000 home with a $100,000 mortgage and a $50,000 HELOC. That leaves $50,000 in equity in the home. A drop in home value to $175,000 would leave only $25,000 in available equity, a 50% decline. Your lender would have grounds to freeze your HELOC.”

If you do receive a HELOC freeze notice, you may be able to seek recourse. Check out my list of ways to revive your home equity line.

See Also:

HELOC Lender Obligations Under the Truth in Lending Act

HELOC Foreclosure

Tags | Heloc, heloc freeze, home equity line of credit