Several borrowers are reporting that Washington Mutual (WaMu) is still sending out HELOC freeze and reduction notices. A Los Angeles Times blog gives this account:

“Last week a Realtor in San Diego wrote, ‘Just after I made a large payment of $10K (only $350 payment was due), they took away all of my credit line. This is putting me in a panic and possible bad situation. I have been with WaMu for many years and have had many home loans with them, and never missed a payment, and have always had bank accounts with them, in addition, my credit is great. I had no notice or warning whatsoever, of course if I had, I would not have given them $10,000 that I did not need to.”

Since January, over 100,000 HELOC customers from multiple lenders have received such letters. HELOC lenders are freezing lines because they do not want to lose any more money from HELOC foreclosures on upside-down properties (homes for which the borrower owes more money than the property can be sold for).

Unfortunately, HELOC lenders do not need to warn their customers before freezing or reducing their limits. If you plan on using your HELOC in the next few months, you may want to withdraw the needed money now and place it in a high-yield savings account or CD.

See Also:

Strategic Withdrawals to Avoid the HELOC Freeze

What to if You’re Hit by the HELOC Freeze

Tags | Heloc, heloc freeze, home equity loan, lenders, loans, Washington Mutual