I am dependant on HELOCs for expansion and so am interested in any information on what would cause a lender to freeze your line of credit. I recently drew mine almost all the way down to complete another deal, but if there is a possibility of a freeze I would prefer to pay for a rate lock on the current 7.5% and use the refi I would normally use to pay off the HELOC for the next purchase.
Normally I park the money in the HELOC and draw on it as needed to save on interest, but without the HELOC money I would have to sell a property to continue my business, and I prefer to hold- especially in this market!
Yes, please share any info. per any freezing going on with helocs, everybody.
I personally had this happen last summer/fall when Wells Fargo was changing websites. The change caused the autopay not to work and by the time I caught it and got to a person to notify and correct, they had frozen account. They unfroze as soon as payment made. Additionally, in the fall, I had 2 helocs increase limits. One was a different WF heloc, other was CW and both were on investment props.
Hi Guys,
My investor friends have heard the same about this freezes.
The obvious reason to freeze a HELOC would be any changes in the owners credit, missed or delayed payments.
In this case that would be understandable.
Other than that, then the situation would be scary and we need to find out.
Chris, you should post the question and do some kind of survey to find out if this is happening all across. Or just to few and why.
I read my heloc documents and they can freeze it at anytime like a credit card. Mine is with Bank of America. I know it is tough for penny-pinching investors to draw out heloc and have the money sit in a lesser interest account, but consider where you would be if you lost access to that $$$. If you can handle being without the $$$ then you have nothing to worry about. I can buy several props with $60k and must not lose access to that cash. The heloc interest is deductable anyway so I get some of it back.
SFH in Riverside, CA. I had a feeling they would do it. They stated that they will unfreeze it once conditions get better. Like the previous post said, that would be a while. And now I just can imagine what would happen to those people that depend on this HELOC to pay their monthly housing and CC bills. This can really trigger another wave of delinquencies and foreclosures.
Does anyone know how to get the Zip Code list that banks are redlining as declining areas?
I just pulled mine out of Wachovia, Regions (AmSouth) and Bank of America and deposted into a money market account. I was told at BOA that all HELOC are based on property valuations and if the valuations dropped they could freeze the HELOC.
The interest rate on my HELOC is actually lower now than my investor mortgages. I have the option of converting any balance owed on the HELOC from an interest only 20 year line of credit to a fully amortized 20 year mortgage for a $95 fee. I think this may be the way to go after the next rate drop. Should be cheaper to keep my cash out refi money in a money market account rather than use it to repay the HELOC, since I will reinvest it within a few months anyway. Certainly safer- although the appraisal has actually gone up recently on the home it is based on, due to a lot of improvements I did...
I just spoke to an informative Countrywide rep. CW has frozen 51,000+ helocs in 08 so far. Valuations only. My house appraised 310K in 8/2006. System values at 266K today. Thus, my 165K 1st + 80K heloc = 245/266 = FROZEN.
Now, my good news is that 70K remains on this heloc and interest rates are way down. So, autopay interest only and focus on other loans for now.
He also told me that there is a specific dept. that hears reasons/cases to unfreeze. So, I Could call them if I wanted to plead my case.
PS. MY fico midscore is 744 and I have 0 lates on my Many loans, helocs, cc accts. SO this is valuation driven ONLY. [ Edited by ceinvests on Date 03/30/2008 ]
There was a special about this on Good Morning America today and this lady with good credit and who was paying all her bills on time, had her line frozen.
I have had numerous calls from past clients explaining the banks are freezing their lines or lowering the line amount. They send a letter to the client with no return phone number or reason for the freeze. This really is taking a toll on allot of people that were depending on these lines for a bad day or currently using it to make it through the rough times. It is sad. Thanks.
This happened to me. Bank of America reduced my available line of credit by 300,000. I was able to get it reinstated by showing proof of value of recent solds in my neighborhood. Now, I have pulled out 200k for safekeeping and put it in a money market in a different bank. Who would think it would come to this? Craziness!
rglover,
You are right that paying bills with loans CAN be a problem. However... helocs can really help all types of people at all types of stages with...
1. pay the tax bill B4 penalties that has doubled because of this runaway increase.
2. pay the crazy utility bills during this runaway increase.
3. get the classes needed to keep or increase a job.
4. pay for the huge cost of trading out hot water, heat pump, insulation, etc to get bills back in control.
5. Take some therapy and classes to manage our stress during these strange and confusing times.
6. Pay off the bad credit card that just tripled in interest because you were 5 days late because the oil bill quadrupled.
There are many more... I understand you are right that many are spending more than they have.... but many more are trying to survive and keep their homes.
I now have several tenants who are middle aged or older and were not able to keep their houses. They tried. They wanted to make it work. These are good average Americans living in one of the richest areas in this country, yet they are loosing their homes because we only think one way about mortgages. It would have been easy to restructure their loans so they could have stayed in them.
I, by the way, have NOT lost anything, but I do feel the pressure. So this is not a personal note. I am always about creating the win/wins. And I do not see massive foreclosures and empty homes as good for anybody.
Just my opinion and observation.
And yes, I am saddened by the many people who bought homes last year and just walked away from them ruthlessly == That is a bigger problem.
I fianlly got around to checking into a replacement HELOC with my current lender - Countrywide. They said they could do it w/o a problem with my excellent credit, however, they are charging 1 1/8 above prime and it would cost $914. I called WAMU, they will give me PRIME + 0.01, no cost. That was a no brainer.
I had my Heloc frozen. Their reasoning was that my house value went down about 30% from what it was appraised at last year when I opened it. I wrote them a letter indicating that I do not live in a depressed market and their assessment of the value of my home was inacurrate. I pulled comps for the last several months along with the tax value and submitted it for review. A week or two later I received a letter indicating it was reinstated. If anyone gets theirs frozen and can prove that their home value has not significantly depreciated they should be able to have it reinstated. In my case I have impeccable credit - never any lates and have numerous other mortgages with BOA so I am not sure if that played any part in their decision.
i FOUND SOME Business card that had 12mo 0% interest for purchases and balance transfers..
then flip to new account.[ Edited by cjmazur on Date 11/14/2008 ]
If its a large bank, like wells fargo, they wont cancel the PMI. They get some kind of fees from this PMI i guess. They usually tell you its off when its 25% less than your purchase price and they dont give u credit for equity.
In your case, they would want the mortgage down to $45k.
I didnt say it was legal what the banks are doing to PMI, its just the reality of PMI and the total disregard for the real estate laws.
Unfortunately, with all the economic and real estate trouble, no one has time to challege the banks on PMI. I think it will be 3 or 4 more years before the PMI situation gets challenged by a major law firm. Until then...we just keep paying PMI. Sorry
I am dependant on HELOCs for expansion and so am interested in any information on what would cause a lender to freeze your line of credit. I recently drew mine almost all the way down to complete another deal, but if there is a possibility of a freeze I would prefer to pay for a rate lock on the current 7.5% and use the refi I would normally use to pay off the HELOC for the next purchase.
Normally I park the money in the HELOC and draw on it as needed to save on interest, but without the HELOC money I would have to sell a property to continue my business, and I prefer to hold- especially in this market!
Chris
Yes, please share any info. per any freezing going on with helocs, everybody.
I personally had this happen last summer/fall when Wells Fargo was changing websites. The change caused the autopay not to work and by the time I caught it and got to a person to notify and correct, they had frozen account. They unfroze as soon as payment made. Additionally, in the fall, I had 2 helocs increase limits. One was a different WF heloc, other was CW and both were on investment props.
Hi Guys,
My investor friends have heard the same about this freezes.
The obvious reason to freeze a HELOC would be any changes in the owners credit, missed or delayed payments.
In this case that would be understandable.
Other than that, then the situation would be scary and we need to find out.
Chris, you should post the question and do some kind of survey to find out if this is happening all across. Or just to few and why.
On my most recent statement they offered me a discounted rate if i drew my HELOC down...My HELOC is with Fifth Third Bank.
I read my heloc documents and they can freeze it at anytime like a credit card. Mine is with Bank of America. I know it is tough for penny-pinching investors to draw out heloc and have the money sit in a lesser interest account, but consider where you would be if you lost access to that $$$. If you can handle being without the $$$ then you have nothing to worry about. I can buy several props with $60k and must not lose access to that cash. The heloc interest is deductable anyway so I get some of it back.
SFH in Riverside, CA. I had a feeling they would do it. They stated that they will unfreeze it once conditions get better. Like the previous post said, that would be a while. And now I just can imagine what would happen to those people that depend on this HELOC to pay their monthly housing and CC bills. This can really trigger another wave of delinquencies and foreclosures.
Does anyone know how to get the Zip Code list that banks are redlining as declining areas?
Has any one had any issues with lines being frozen in the Northeast? In particular SW Connecticut?
I just pulled mine out of Wachovia, Regions (AmSouth) and Bank of America and deposted into a money market account. I was told at BOA that all HELOC are based on property valuations and if the valuations dropped they could freeze the HELOC.
The interest rate on my HELOC is actually lower now than my investor mortgages. I have the option of converting any balance owed on the HELOC from an interest only 20 year line of credit to a fully amortized 20 year mortgage for a $95 fee. I think this may be the way to go after the next rate drop. Should be cheaper to keep my cash out refi money in a money market account rather than use it to repay the HELOC, since I will reinvest it within a few months anyway. Certainly safer- although the appraisal has actually gone up recently on the home it is based on, due to a lot of improvements I did...
Chris
Here is some more insight for you all:
I just spoke to an informative Countrywide rep. CW has frozen 51,000+ helocs in 08 so far. Valuations only. My house appraised 310K in 8/2006. System values at 266K today. Thus, my 165K 1st + 80K heloc = 245/266 = FROZEN.
Now, my good news is that 70K remains on this heloc and interest rates are way down. So, autopay interest only and focus on other loans for now.
He also told me that there is a specific dept. that hears reasons/cases to unfreeze. So, I Could call them if I wanted to plead my case.
PS. MY fico midscore is 744 and I have 0 lates on my Many loans, helocs, cc accts. SO this is valuation driven ONLY. [ Edited by ceinvests on Date 03/30/2008 ]
There was a special about this on Good Morning America today and this lady with good credit and who was paying all her bills on time, had her line frozen.
Watch out if you need your heloc.
I have had numerous calls from past clients explaining the banks are freezing their lines or lowering the line amount. They send a letter to the client with no return phone number or reason for the freeze. This really is taking a toll on allot of people that were depending on these lines for a bad day or currently using it to make it through the rough times. It is sad. Thanks.
Best Regards,
Olddog
This happened to me. Bank of America reduced my available line of credit by 300,000. I was able to get it reinstated by showing proof of value of recent solds in my neighborhood. Now, I have pulled out 200k for safekeeping and put it in a money market in a different bank. Who would think it would come to this? Craziness!
""And now I just can imagine what would happen to those people that depend on this HELOC to pay their monthly housing and CC bills.""
wow, they made a good move to freeze those accounts. anyone depending on one loan to pay day2day expenses = writeoff (to the last foolish lender)
rglover,
You are right that paying bills with loans CAN be a problem. However... helocs can really help all types of people at all types of stages with...
1. pay the tax bill B4 penalties that has doubled because of this runaway increase.
2. pay the crazy utility bills during this runaway increase.
3. get the classes needed to keep or increase a job.
4. pay for the huge cost of trading out hot water, heat pump, insulation, etc to get bills back in control.
5. Take some therapy and classes to manage our stress during these strange and confusing times.
6. Pay off the bad credit card that just tripled in interest because you were 5 days late because the oil bill quadrupled.
There are many more... I understand you are right that many are spending more than they have.... but many more are trying to survive and keep their homes.
I now have several tenants who are middle aged or older and were not able to keep their houses. They tried. They wanted to make it work. These are good average Americans living in one of the richest areas in this country, yet they are loosing their homes because we only think one way about mortgages. It would have been easy to restructure their loans so they could have stayed in them.
I, by the way, have NOT lost anything, but I do feel the pressure. So this is not a personal note. I am always about creating the win/wins. And I do not see massive foreclosures and empty homes as good for anybody.
Just my opinion and observation.
And yes, I am saddened by the many people who bought homes last year and just walked away from them ruthlessly == That is a bigger problem.
I fianlly got around to checking into a replacement HELOC with my current lender - Countrywide. They said they could do it w/o a problem with my excellent credit, however, they are charging 1 1/8 above prime and it would cost $914. I called WAMU, they will give me PRIME + 0.01, no cost. That was a no brainer.
I had my Heloc frozen. Their reasoning was that my house value went down about 30% from what it was appraised at last year when I opened it. I wrote them a letter indicating that I do not live in a depressed market and their assessment of the value of my home was inacurrate. I pulled comps for the last several months along with the tax value and submitted it for review. A week or two later I received a letter indicating it was reinstated. If anyone gets theirs frozen and can prove that their home value has not significantly depreciated they should be able to have it reinstated. In my case I have impeccable credit - never any lates and have numerous other mortgages with BOA so I am not sure if that played any part in their decision.
i FOUND SOME Business card that had 12mo 0% interest for purchases and balance transfers..
then flip to new account.[ Edited by cjmazur on Date 11/14/2008 ]
can you do a cash out refi or heloc?
if you do these, have he credit card paid off thru escrow. It will make the lender happy.
If its a large bank, like wells fargo, they wont cancel the PMI. They get some kind of fees from this PMI i guess. They usually tell you its off when its 25% less than your purchase price and they dont give u credit for equity.
In your case, they would want the mortgage down to $45k.
check out The Homeowners Protection Act of 1998. it seems to mandate the remove of PMI.. and http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt072.shtm
"The Homeowners Protection Act of 1998."
I didnt say it was legal what the banks are doing to PMI, its just the reality of PMI and the total disregard for the real estate laws.
Unfortunately, with all the economic and real estate trouble, no one has time to challege the banks on PMI. I think it will be 3 or 4 more years before the PMI situation gets challenged by a major law firm. Until then...we just keep paying PMI. Sorry