HELOC freezes have been going on for months and, unfortunately, these suspensions are showing no signs of a slowdown. Recently, a new batch of HELOC customers have reported receiving HELOC freeze notices from their lenders.

Washington Post reporter Elizabeth Razzi explains:

“My inbox is overstuffed with comments and suggestions from readers…

In response to last week’s column about the availability of credit, Greg Schuckman of Lorton said banks are continuing to pull back on existing home-equity lines of credit. “I got a letter from Wachovia earlier this week letting me know that my $239,000 HELOC had been ‘suspended’ because of falling home values,” Schuckman wrote. “Even though I have perfect credit and have about $250,000 in equity in my home, according to their calculations, falling home prices in my area have caused the value of my home to drop by about $150,000 from a high of $745,000 two-and-a-half years ago. I have applied for a new, $150,000 line of credit with a different lender, so we’ll see how that goes.”

If you live in an area with declining home values, keep an eye out for a HELOC freeze letter.  If you do receive one, there are a few actions you can take to have the decision re-evaluated.

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