Earlier this week, Washington Mutual announced that it will no longer offer Mortgage Plus loans. Previously, these loans were use to combine traditional mortgages with a HELOC option.

Forbes.com reports:

Washington Mutual late Wednesday said it will commit an additional $1 billion to a fund intended to help eligible subprime mortgage borrowers and that it will trim its mortgage product offerings.

The bank will no longer offer negatively amortizing loans and has also stopped offering its Mortgage Plus loan, which combined a mortgage loan with a home equity line of credit into a single loan and linked the HELOC’s cap to payments of principal.

Since HELOC loans have become a greater risk to lenders, chances are high that other banks will limit programs in the future.

See Also:

HELOC Loans Now More Risky to Lenders

How a HELOC Works

Tags | Heloc, home equity line of credit, Washington Mutual