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August 19th, 2009 3:20 PM

It’s been happening for months now. People are trying to get some cash out of their HELOCs, probably because the economy is getting worse. As the twitter nation says…Fail!

It seems banks have decided that houses aren’t worth what they used to be and HELOCs are being suspended. Banks are sending out letters sometimes, but in other cases you find out when you call them and they tell you your HELOC is frozen.

Here’s what they will probably tell you. Your house has dropped in value by more than 10% in the last few months, or your credit score has declined. Many people think that the bank has all the power and that you cannot fight them. Not so fast, you need to read the fine print. Some contracts require the bank to provide proof as they are engaging in an adverse action. If they cannot prove that their reasons are sound, they may be forced to reopen your credit line. Many banks may be hoping that consumers don’t challenge their decision to freeze credit lines, but some banks have clear language allowing them to engage in this practice.

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Posted by James E. Bogris on August 19th, 2009 3:20 PMPost a Comment

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