How to prevent and/or deal with a frozen or lowered HELOC

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* what was the adverse action (IE: credit line reduction, line access terminated, etc) ability to use HELOC suspended
* if known, what triggered the adverse action (IE: appraisal such as county tax appraisal, or private or unspecified appraisal source, or other negative information found on credit report, etc) automated appraisal of properties in my area
* any other info relating to the Heloc, such as:
1. what combined loan to value % (CLTV) was the HELOC opened with 100% (80% first, 20% HELOC)
2. was the property investment property or primary residence, etc primary residence
3. what state was the property located in Idaho
4. how large was the credit line when opened $42,900
5. what did the credit line get reduced to (if the lender kept it open)CL is still at $42,900 and still shows as open and in good standing; just can't write checks
6. how much of the line was being used at time of adverse action $0
7. any other pertinent information (IE: were there any late payments on the heloc, delinquency on primary mortgage payments, etc) Nothing. Large AOR going on at the time, but not relevant (see below)

This was with USAA.

Several data points:

1. A USAA rep called me ahead of time and let me know what was happening and that I would be getting a letter in the mail. She was very clear that it was a move by USAA to be conservative, that it was based solely on reductions in property values (as determined by an automated appraisal process) in my area and had nothing to do with me personally, no check of my credit report, etc.
2. The line is still in good standing and shows on my credit reports as open, I just can't access it for now. It's frozen, I guess.
3. I can ask for it to be unfrozen when I think the property value has gone up to a certain value mentioned in the letter.
4. I did have an AOR going on at the time, but as mentioned in #1 above, they were very clear that my individual credit was not a factor at all.

2Cor521

SUCKISSTAPLES said: Trinob said: has anyone been tapping their unused lines and depositing the funds into a high yeld savings account so that they simply have the funds available in the event the lender reduces the available credit?yes.

Ditto. Good thing too as my HELOC was frozen sometime last month. I still haven't gotten the letter promised but know it is so because I paid off a little of the principal this month just to see if I could borrow it back. No go. Oh well, hopefully the tax free muni money markets will persist at over 5% yield. I'm not sure that I would have done this had I not had a mission critical need for the money in order to start my poop farm. But with the rate at prime minus .75% it's not that hard to keep the money at about breakeven to a little profit so maybe I would have done so.

SUCKISSTAPLES said: Trinob said: has anyone been tapping their unused lines and depositing the funds into a high yeld savings account so that they simply have the funds available in the event the lender reduces the available credit?yes.
Ditto as well.

I think the added liquidity is well worth the interest expense. Or you can put it in a 6% rewards checking account, and make money at the same time. Arbitrage at its finest.

Hi all,

I'm with Nexity for my HELOC. Are there any datapoints out there for Nexity?

Secondly, my HELOC rate has now dropped to 3.94%, when my first mtg is at 5.25%. Of-course the Heloc % is variable, but I'm wondering if there's a way I could save money on the difference in rates...May be some of you have an idea...

-G

gyagya said:
Secondly, my HELOC rate has now dropped to 3.94%, when my first mtg is at 5.25%. Of-course the Heloc % is variable, but I'm wondering if there's a way I could save money on the difference in rates...May be some of you have an idea...

-G


Looking for the same, Heloc is 3.5% and mtg is 5%.
Mine is from National City and after reading that a lot of people got heloc frozen, i pulled all 60k out.
Now facing dilema : should I put them to the DSD for 4% and get 0.5% spread or figure out way to pay mtd and get 1.5% spread.

MoneyOCD said:
Now facing dilema : should I put them to the DSD for 4% and get 0.5% spread or figure out way to pay mtd and get 1.5% spread.


depends on the size of the HELOC and how it relates to your income/ monthly cash flow.
I don't think PRIME will go up for several months. It may take a year.
You have 1.5% difference, it may take 2-3 years until prime is up that much.

I would take a portion of the HELOC and pay down the mortgage and keep the other portion in a savings instrument. I do not know what DSD is.

That's what I did.

Peter

My Heloc got frozen, told I need to pay $300 for an appraisal.
Though their blanket appraisal (illegal) says that I have a $100k equity over 1st mortgage and heloc, so what is the problem?


They refuse to say what the new appraise value need to be at for them to release of the freeze.
So even If I paid $300 and show $100-150k margin they could still refuse.

I plan to sue for 3 times the amount of the limit they reduced.
Contract is a contract.
I have numerous times told them that they are violating Regulation Z.

The $300 fee may be a income producing as they probably pay the appraiser $180.
So their will be punitive damages and class action status will planned.

tonysavealot said: My Heloc got frozen, told I need to pay $300 for an appraisal.
Though their blanket appraisal (illegal) says that I have a $100k equity over 1st mortgage and heloc, so what is the problem?


They refuse to say what the new appraise value to be at for them to release of the freeze.
So even If I paid $300 and show $100-150k margin they could still refuse.

I plan to sue for 3 times the amount of the limit they reduced.
Contract is a contract.

The $300 fee may be a income producing as they probably pay the appraiser $180.
So their will be punitive damages and class action status will planned.


Read the terms of your docs - my bet is that there is wording that your credit line can be reduced by the lender for ...

You don't have a lawsuit.

>Read the terms of your docs - my bet is that there is wording that your credit line can be reduced by the lender for ...

They are referring to the term: significant decrees in value.

When I asked if it that means 10% decress or 40%?, they don't have an answer

They admitted the wording is very vague.
Using vague words in contract makes that part invalid.

I'm new to FW as of today, this is my first post. I hope it's in the right place.

I got here by way of a Google search for "heloc expiring" and decided to join.
Here's my situation:
As part of the transition from one big bank to a bigger bank that gobbled up the first one, a "glitch" (their words) occurred and now I have had to research it and find what they did wrong.

My first thought, after discovering the solution, was to run right over to the branch that I have been dealing with for years to get them to correct the situation, but, while discussing it on the phone I discovered that my "expiration date" is one year from now. Due to this, I had hoped to discuss options available for refinancing when I went to the branch, but, while scanning thru the posts in this forum one thing caught my eye and that was about the desirability (or lack of) of alerting the bank about the draw expiration more than 90 days in advance.

Of course, when I opened the line, everything was rosy and "sure when the time comes, I can just refinance". Well, those were different times and now with the current economics and the LTV being greater than 85% there's no way I can just pay it off, and I'm worried about refinancing it, with my limited income and not good credit rating.

So, I guess what I'm asking is:
Is it advisable to discuss a refinance now? Better to hold off and see what happens?
What programs are available or in the works for saving my home, and are banks discussing these now?

I hope this hasn't been too rambling, and that some forum meber(s) may have experience with this.

Thanks,
Joe

If you have any unused credit line you wish to draw out, be sure to do so before you speak with them about anything.

I received a letter from Wells Fargo last week informing me that our $247K HELOC has been frozen from any new withdrawals (we currently have a $0 balance anyway; account was opened about 3 years ago, as part of the second trust). Reasons cited was the decline in the value of the house.

* what was the adverse action (IE: credit line reduction, line access terminated, etc)
Account restricted to new advances.
* if known, what triggered the adverse action (IE: appraisal such as county tax appraisal, or private or unspecified appraisal source, or other negative information found on credit report, etc)
Per their letter, states "due to a substantial decline in the value of the property securing the account." The WF rep. on the phone also said that they used an automated appraisal of properties in my area, taking into account recent sales, MRIS data, foreclosures, etc.
* any other info relating to the Heloc, such as:
1. what combined loan to value % (CLTV) was the HELOC opened with
100% [80% primary, 20% 2nd trust for HELOC]
2. was the property investment property or primary residence, etc
Primary residence
3. what state was the property located in
Virginia
4. how large was the credit line when opened
$247,735.00
5. what did the credit line get reduced to (if the lender kept it open)
$247,735.00; account in good standing with $0 balance but ability to utilize is restricted.
6. how much of the line was being used at time of adverse action
$0.00
7. any other pertinent information (IE: were there any late payments on the heloc, delinquency on primary mortgage payments, etc)
None.

Update 2/4/09:

Just spoke to WF and the rep. essentially repeated what their letter states about the HELOC being frozen. They're waiving the annual fee ($75) and any penalties if I want to close the HELOC due to the restriction being in effect. No impact to any credit scores, etc. To request the close of your HELOC, fax a letter with your account information requesting account closure to Wells Fargo at 1-866-856-9594.

I'll be faxing them a letter today to request them to close it and release the lien on the property.

One small bonus from all this: I get a free CR from Experian (www.experian.com/reportaccess) per their letter.

WaMu HELOC A/A received, dated 2/20/09 (approx 23 months since account opening)
* what was the adverse action? no longer able to take additional advances (frozen HELOC)
* what triggered the adverse action? The letter states "change in property value" from a "proven valuation method"
1. what combined loan to value % (CLTV) was the HELOC opened with 90% CLTV (part of 80-10-10 piggyback purchase)
2. was the property investment property or primary residence, etc primary residence
3. what state was the property located in WA
4. how large was the credit line when opened $45,154
5. what did the credit line get reduced to (if the lender kept it open) CL appears unchanged, account remains open. Available credit changed to zero. No changes were reported to CRAs indicating the account is now "frozen".
6. how much of the line was being used at time of adverse action ~$80 balance was showing on 2/19, but a $45k HELOC check deposited 2/19 was showing online from WaMu's end with a 2/24 transaction date (increasing balance to $45,080.)
7. any other pertinent information:
A. The fact that a large HELOC advance check that I deposited around the date of the freeze cleared the account days after the freeze was supposedly in effect suggests it may have triggered the review.

B. I used the WaMu/Chase Home value estimator for the first time on my property just a few days before the A/A:
http://mortgage.chase.com/pages/other/home_value_estimator.jsp
I recall it estimated a value ~3% lower than purchase price value. This was just after WaMu's home loan web pages transitioned to chase.com. Today, 2/26, the same valuation tool estimates value ~6% lower than purchase price.

C. One pleasant surprise from the letter: "We understand this action may affect your financial goals. Therefore, while we truly appreciate your business, should you choose to payoff and close your account within 90 days of this notice, we will waive any associated cancellation fees upon your request." This saves me $500 (early account closure fee) if I want to refinance within the next 90 days.

-update 1-
I just called a number the letter invited me to inquire about the valuation they got for my home. They said it was originally opened at $452k, and on 2/19 dropped to $415,140 (down approx 8%.) They said I could dispute the valuation only by having an appraisal performed by "lending service international". I found their web site here:
http://www.mivalue.com/

The rep added that in order for them to re-consider unfreezing my HELOC, lsi's appraisal would need to be at least $428,161 (which would be a 5% value drop.)

-update 2-
I found that WaMu is not reporting the frozen HELOC account to the credit reporting agencies any differently than before it was frozen. Their latest update to EX for example, still is indicating the account is "Open", with no drop in "Credit Limit", etc. I would say that is good news.

Just got the dreaded call today from my local bank. I guess I should be thankful I went with a small bank versus one of the giants. They basically slashed by HELOC by 50% which is the new 80% LTV determined by the automated computer appraisal. What's interesting is that they stated that the value was the highest out of the 3 comps determined by the automated appraisal. I just submitted my property tax appeal form and did not find any comp that low. Anyways, the good news is that I can appeal by hiring one of their appraisers and they will take whatever value is given by the appraiser. Sadly, I only had 60% of my original line drawn. I could have avoided the appeal process if I had drawn 100% of my line and stuck it in a rewards checking account. Let this be a lesson to anyone on the fence.

BTW, what happens when property values go up? Does the bank automatically increase the CL?

Thought I'd post here about my issue with WaMu Chase. We got our letter about two weeks ago now. Here are the details:

* what was the adverse action (IE: credit line reduction, line access terminated, etc)

Credit line reduced

* if known, what triggered the adverse action (IE: appraisal such as county tax appraisal, or private or unspecified appraisal source, or other negative information found on credit report, etc)

According to the bank, change in value based on underwriter's appraisal.

* any other info relating to the Heloc, such as:
1. what combined loan to value % (CLTV) was the HELOC opened with


83%

2. was the property investment property or primary residence, etc

Primary residence

3. what state was the property located in

CA

4. how large was the credit line when opened

$100,000

5. what did the credit line get reduced to (if the lender kept it open)

$16,300

6. how much of the line was being used at time of adverse action

$15,400

7. any other pertinent information (IE: were there any late payments on the heloc, delinquency on primary mortgage payments, etc)

Nothing. No late payments on anything. No change in financial circumstances (unless you count for the better). No outstanding debt beyond the 1st and HELOC balances. Tons of equity in the property (actually more than at origination). Not even significant changes in value or equity to the negative (at least if you take my figures over the bank's). See all the gory details on my blog.



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