Tag Archive | "mortgage crisis"

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Home Equity Line of Credit Rates Stay Steady Through This Week’s Crisis

Many financial analysts speculated that the government would slash the Federal Funds Rate earlier today. But, Federal Reserve chairman Ben Bernanke and his colleagues voted unanimously to keep rates the same (2.0%). A federal rate cut would have resulted in lower interest rates on most home equity lines of credit. Almost all U.S.-based HELOC rates are [...] [...more]

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Who’s to Blame for the Home Equity Crisis?

There has been a lot of finger pointing lately. Home equity borrowers are defaulting, lines are being frozen, and over 70% of lenders are reporting tougher standards for new HELOC borrowers. Who’s to blame? According to the Washington Times, it depends on who you ask: “Why the sudden stiffening of HELOCs? It’s the economy, banks say. “Banks are in [...] [...more]

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New WaMu CEO Faces $60 Billion in Home Equity Loans

Washington Mutual got a new CEO this week - a leader that is now faced with cleaning up a messy portfolio of non-performing mortgages and clients walking away from their debt. On the top of the heap is a whopping $60 billion in home equity loans (including home equity lines of credit). WaMu has already frozen [...] [...more]

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National City Now Paying Borrowers to Close Home Equity Lines of Credit

National City is now offering some customers a $200 check if they agree to close their unused home equity lines of credit. Financial Times reports: “The bank’s initiative, which was launched at the end of July, encourages National City customers to surrender their unused home equity lines by waiving fees it would normally charge for closing the [...] [...more]

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Home Equity Lines Hurt Retirement Plans

Some baby boomers may not be able to retire as soon as planned due to limited savings and large home equity line withdrawals. CNN Money reports: “The housing bubble had another perverse effect on our planning: It led us to save less. “Many people thought, ‘I’m wealthier, I already have a big chunk of my nest egg [...] [...more]

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Avoid the HELOC Freeze By Checking Your Credit

According to reports, some home equity line of credit lenders are freezing accounts based on declining credit scores. The Arizona Republic reports: “It also might be smart to check your credit report, evaluate your credit score and make fixes if necessary. Sometimes a drop in credit quality triggers a freeze, not just a declining home value. Unfortunately, a [...] [...more]

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How Regulation Z Affects Home Equity Line of Credit Borrowers

Last week, I posted about the letter from the Office of Thrift Supervision warning HELOC lenders to follow government regulations. Hopefully, this instruction will encourage banks to avoid freezing individual home equity lines of credit without considering a borrower’s unique circumstance (for example, a home with a high value in an area that is generally declining). IndyStar [...] [...more]

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Why Are Qualified Home Equity Loan Borrowers Suffering?

In the last year, terms and qualifying requirements on home equity lines of credit have become extremely strict. Rightly, many unqualified borrowers are now unable to take out home equity loans. However, many qualified borrowers are also suffering under the new requirements. A recent American Banker article explains that lenders should avoid punishing those who would [...] [...more]

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Wachovia Continues Sending HELOC Freeze Letters

According to some reports, Wachovia has continued freezing home equity lines of credit for several weeks. The Philadelphia Inquirer explains: “Wachovia credit-line customers whose home equity has declined 50 percent or more received letters in the last several weeks saying that their credit lines had been reduced or blocked, Wachovia spokeswoman Barbara Nate said. “Our rationale is that [...] [...more]

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Office of Thrift Supervision Warns HELOC Freeze Lenders

Yesterday, the Office of Thrift Supervision (a part of the federal government) urged banks to follow the proper regulations when freezing home equity lines of credit. They explain: “Declining home prices in parts of the country are prompting some institutions to curtail, suspend, or terminate customers’ home equity line of credit.  Today’s guidance emphasizes that institutions taking [...] [...more]

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