Home Equity Loans Become Next Casualty in Credit Crisis
- From: Too_Many_Tools <too_many_tools@xxxxxxxxx>
- Date: Fri, 28 Mar 2008 23:45:35 -0700 (PDT)
Another example of the Bush economy....
I don't know if Americans can stand much more of this Republican
prosperity.
TMT
Home Equity Loans Become Next Casualty in Credit Crisis
Millions of Americans Are Facing Consequences of Borrowing Against
Their Homes When Values Were Inflated
By BIANNA GOLODRYGA, ROGER FORTUNA and OLIVIA STERNS
Mar. 28, 2008--
Another side effect of the current U.S. housing crisis is the
tightening of the home equity market.
As the value of homes continues falling, people have seen the equity
in their homes wiped out.
In response, lenders are putting more restrictions on home equity
loans, often by simply freezing loans and lines of credit, leaving
millions of Americans in the lurch.
For decades, owning a home has not just been a measure of achievement,
it has also been a measure of net worth. When home prices were
ballooning Americans took out a record $1.1 trillion in home equity
loans, turning their homes into their personal A.T.M. machines.
"Now with housing prices dropping so dramatically at these
unprecedented levels, we are actually seeing banks tightening up and
its hurting people in ways they never thought they would be hurt
before," explained Wendy Bounds, a columnist at the Wall Street
Journal and a "Good Morning America" contributor.
Many loans are now greater than the value of the homes, and that is
causing leary lenders to re-evaluate and in some cases cut lines of
credit.
Homeowner Lynette Madden has always paid her bills on time and has
barely tapped into the home equity line of credit she was granted on
her home. Then, last month, she got a surprise letter from her lender
telling her that her line of credit had been abruptly cut off.
"I was shocked. I was amazed that they could actually do this. And
what if I had actually tapped into my full line of credit?" said
Madden.
Madden's lender, Countrywide Financial, says on its Web site that the
practice is in keeping with regulation established by the Federal
Reserve Board that says lenders can freeze loans if "the value of the
dwelling that secures the plan declines significantly below the
dwelling's appraised value." Click here to read Countrywide's
statement.
What You Can Do
If you're in Madden's situation, here are some tips for what you can
do:
If you think you still have enough equity in your home to cover your
line of credit, you need to appeal with your mortgage company.
You can also get your home reappraised to clarify its value, even
though this will cost you approximately $300-400.
Do not continue to use your line of credit until you clearly
understand your standing.
.
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