Wealthy Borrowers Affected By Home Equity Line Freezes
Posted on 07 August 2008 by Jamie Beck
Even the wealthy have been affected by home equity line of credit freezes this year. Despite a good job and a solid income, many have faced HELOC reductions due to the declining value of property.
The Wall Street Journal explains:
“Wall Street firm Morgan Stanley added some of its well-heeled clients to the long list of customers whose lenders have frozen or reduced their home-equity loans.
While federal laws do not allow lenders to force responsible borrowers to repay the loans immediately, those same federal statutes allow lenders to reduce or eliminate customers’ home-equity lines of credit if the lender can reasonably determine that a borrower’s home has fallen in value.”
HELOC freezes can often be appealed. But, as we’ve mentioned before, the reversal process can take time and be expensive for borrowers who must pay for new property appraisals.
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Tags | Heloc, heloc freeze, home equity line of credit, Morgan Stanley