In a bind, WaMu squeezes HELOC borrowers

I reported back in December that Washington Mutual had confirmed it was lowering the amount of some home equity lines of credit, or HELOCs. Judging from my e-mail in-box, WaMu is continuing to squeeze its customers.

This came in tonight:  "I just received the notice today of the reduction on our HELOC from WaMu ... As a customer I can verify that the amount they lowered it to is much less than the amount we currently have as a balance.  On 4/2/08 our balance was $69,778.47.  Today, 4/9/08, we received notice via mail that our limit was to be lowered to $64,900.  In addition to this change, which I should mention the letter was written on 4/3/08, the bank charged us an overlimit fee on 4/4/08."

Last week a Realtor in San Diego wrote, "Just after I made a large payment of $10K (only $350 payment was due), they took away all of my credit line.  This is putting me in a panic and possible bad situation.  I have been with WaMu for many years and have had many home loans with them, and never missed a payment, and have always had bank accounts with them, in addition, my credit is great. I had no notice or warning whatsoever, of course if I had, I would not have given them $10,000 that I did not need to."

More: "I am a Realtor, and times are tough, and it helped knowing that I had that cushion, making it a little easier to justify spending money on marketing and advertising in an effort to keep business coming in and thus enabling me to meet my payment obligations."

This is a significant trend in the economy right now: it is hard for lots of people to borrow money. Cal mentions this often in the comment section.  The Fed can cut interest rates 'til the cows come home, it doesn't matter, it's still hard to borrow.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.

Comments

[puckhead]

I agree that the FED can cut rates all it wants, but unless the credit market improves it will be very difficult for the economy and the housing market to improve. It's an unpopular view on this blog, but I think the govt will ultimately have to in some form backstop the value of mortgage back securities either by buying them in the open market or to guarantee them. And when that happens, all hell will break loose on this blog.

[Laker]

It might be tough to borrow money but that is only applicable to people that borrow against their "equity" in their house that is no longer there. If you have a mortgage of $500,000 and a home equity line of credit of $100,000 and the house was worth $700,000 in 2006 but today it is worth $500,000 (and that is if your're lucky to find a sucker to pay that...) so the bank finally realizes that and sure would do anything they can to eliminate that. And they are 100% right.
Think about it, if something happens and you need to sell, or can afford to keep paying, the bank will foreclose, and will most likely even not cover the 1st mortgage...the 2nd note - that is that HELOC goes straight to the dumpster...and thus the bank get 0 on the dollar....
Way to go WAMU! If there is no equity, there is not Home Equity Loan....

[Laker]

puckhead, the government does not have the money to buy all the mortgage backed securities...if you think they can simply print couple of trillion dollars...that will translate to a 100-200% price inflation...and you will be dreaming about $4 a gallon for gas because it will be $20-30

[l.a.guy]

Man that's cold. Nice touch with the late fee too.

I'm going to make a bold prediction that "I am a Realtor, and times are tough..." is going to get less sympathy than George W. at an Iraq anti-war rally.

[Fred]

All Americans should only use ATMs that are FDIC-insured. Homes are not.

[J in LA]

Does anyone else here think that one of the reasons we are in this mess, among others, is a silly belief that you can "take money out of your house?" This is a clever manipulation of words no doubt given life by realtors and lenders, but in all other respects converting equity into cash means actually selling an asset for cash. It's only when we talk about homes that people think **borrowing money through a loan collateralized by your home** is "taking money out of your house?" People, don't get upset at the banks for managing their risk profiles. You may be special, but in the bank's eyes you're just a person with X credit score in Y zip code who has Z line of credit available to him, and that translates into some likelihood of default regardless of how nice and responsible the person is that you see in the mirror. Don't hate the bank for doing what they should have been doing all along - ask yourself why you think it's a good idea to turn the occasion of a partially-paid off home (blessed equity) into an excuse to borrow borrow borrow some more. The whole notion of a HELOC seems to be the pursuit of ensuring that your personal balance sheet never ever actually gets into the black. Jesus, stop borrowing people. Is it the end of the world if you simply pay off your loans and only spend what you have?

[Carey Parker]

Hi Peter, It's interesting that WAMU is also having its share of problems too -- couldn't happen to a nicer bank. I contacted them not long ago as I am also a REALTOR and anticipated some setbacks in sales, and asked for an increase in my credit line to help with expenses. I'm only at 10% now, and they wouldn't do it under the same circumstances as when I originally obtained the HELOC, no doc, stated income. Now for me to have access to my original 20% down, they want me to provide docs, data, verification of income, as if I was the world's worst person. They surely have tightened their credit standards. WAMU in my experience has been the worse bank I have dealt with on a customer service level, including everything from confusing my personal accounts with my father's accounts because I am listed as a beneficiary, and then misspelling my name on new checks, and then sending statements to an address where I no longer live after two years, when trying to correct my records, thus creating several late payment scenarios. I have had to call several times to deal with this since it involved my HELOC and unfortunately and several late payments. Plus they continue to not provide an online payment program. Gee, I wonder why? The same is true with payments on cash reserves. Just another nickel and diming opportuning for WAMU to charge more fees to its customers for their apparent lack of performance to do something in light of WAMU's apparent plan of "we don't make it easy for the customer" scheme.

Peter, You should ask for your payment back. It would seem to me that if WAMU has any respect for your business and you as a customer it should have given you some reasonable notice as to its intentions to reduce the credit line available, and/or exercise its option to do just that, so you could have made some reasonable decision as to what you wanted to do with your money and how to invest it, etc. WAMU doesn't care about its customers, and this is just another example.

Good Luck to you. I have enjoyed reading your blog and will bookmark it for more. Interested in property in the desert? Come visit me to find out more about La Quinta and Citrus Country Club homes at www.CitrusLifeToday.com
Thanks, Carey Ann Parker, REALTOR

[LeavinLA]

I can understand lowering a HELOC credit limit in light of declining value. But lowering it, then charing an overlimit fee is just wrong.

[Fredke]

"Now for me to have access to my original 20% down, they want me to provide docs, data, verification of income, as if I was the world's worst person."

WTF? Imagine a bank wanting docs, income verification, etc. before making a loan! BTW, is your original 20% actually equity in the house or is it sunk costs? (In other words, is the CURRENT VALUATION at least 20% more than you owe?)

[RottedOak]

The notion that a HELOC should be used as a financial "cushion" is one of the things that should be driving banks to reduce them. The times when someone needs a cushion are precisely the times they are most likely to default. I don't blame the banks for reigning that in.

That said, charging an overlimit fee the day after the limit is lowered (and probably before the borrower even knows it is lowered) is outrageous. The only defense I can think of is that it might have been an automated result that they didn't think to turn off. If that's the case, I'd expect the fees to be rescinded promptly. If it was intentional and they don't waive the fees, then a lawsuit would be in order.

[Truth2Pwr]

Scenarios like this merely illustrate the point that I continually try to make to friends considering "buying" a house. They aren't buying a house. The bank is buying a house and allowing them to live in it in exchange for a collateralized revenue stream of $X,XXX per month for the next 30 years, after which they will finally "own" the house. They may be able to sell that obligation or borrow against it, but it is the obligation that they are selling, not the house (which belongs to the bank). Based on the rapidly depreciating value of that contract, if you bought within the last few years and don't have a boatload of equity in your home, for all intents and purposes....

....you're just a really, really, DUMB renter.

[Michael Snyder]

The days of banks making ends meet of loan performance are long gone. The primary profit centers for banks are fees & penalties. WAMU has led the pack right along with BA & Wells Fargo in fleecing the consumer at every turn. I opened a checking account at a WAMU years ago because it was within walking distance of my home. Within three months I closed it after they'd repeatedly bounced checks while the funds were listed as available on my receipt & then refused to make it right. Their reason? I had bounced checks. Bankers must have a special version of Excel because mine won't calculate in circles.

Frankly I can't understand why folks don't get smart & join a credit union. I've been with mine for decades & it's open to anyone. They've made mistakes, but when they realized there was a problem, they've always made it right. With over a million members WESCOM offers every service I need for my self & a small business & most credit unions are linked by ATMs making their's the largest available ATM network. The only thing the financial sector knows or cares about is dollars. If you want to make an impression, take yours away from them.

[Bing]

When you have a balance that's above the house equity, banks should reduce their risk. People need to understand that there shouldn't be any free lunches. I recently came across a short sale situation. The seller max out on his equity and is now asking the banks to accept a huge loss. Does this sound fair to the banks? Would you lend me some money if you know I won't be able to pay you back? Stop borrowing if you have no means to pay it back; People complaining the HELOC reduction probably are the same folks who won't hestitate to take advantage of the banks with short sales or foreclosures. BTW, I had two HELOCs reduced by WAMU recently; and I am taking it just fine.

[Digitalian]

The problem is not that loans are unreasonably hard to get it's that the standards for borrowing have gone back to where they were before this mess all started. People have become accustomed to getting easy credit in recent years and relying on it to "cushion" their lifestyles. Well, welcome to the new reality and get used to it because it figures to stay this way for quite a while.

[lefty]

guys you know what WM doesn't have a page for foreclosures, they want you to use buybankhomes.com i don't know why.

hey did you ever wonder if your first mortgage can just cancel on you too? lol just kidding! anyway, WM's loss is your gain in amazing metro L.A.!! so start shopping today before you end up in riverside!

[tbgpalisades]

"for me to have access to my original 20% down"

Hilarious statement...people have to realize that it's the bank's money they're using. Guess what? You have to pay it back! It's called a bank loan, not an investment. Only 80% more to go.

[Cal]

I find it amazing how addicted to credit some people are..

Just wait until the banks start doing the same thing to CC limits.

I think you see the effects of the credit crunch not only on these individual transactions but you can see it spreading in the economy. I do not think the fact that 4 or 5 small Airlines went bankrupt in a week is a coincidence. Short term financing is drying up, especially for the higher risk borrowers, both corporate and personal. People are going to have to learn to stand on their own two feet.

And that is a huge change compared to the last 10 years.

[Cal]

OT:

In case you didn't see the WSJ article regarding foreclosures:

http://online.wsj.com/article/SB120776827998402453.
html?mod=hps_us_inside_today

I thought this sentence was pretty amazing:

"More than half of callers are in far worse shape. Many took out so called stated-income loans that exaggerated their incomes and can't afford their mortgages even at a 0% interest rate. To make payments manageable, the mortgage company would have to cut the outstanding loan balance by an average of $76,000."

[NoCal SC]

Funny, I thought a savings account was supposed to be your 'financial cushion' in case of emergencies, not a HELOC. I agree with J in LA and the others who posted. I also love whenever someone is profiled about losing their HELOC they *always* say it was just there in case of emergencies and they would never dream of using it for 'frivolities.' Yeah right.

And Carey Parker, you get no sympathy from me. Heaven forbid a bank perform due diligence on someone they're loaning money too. You've just perpetuated the worst stereotypes of realtors that most regular readers of this blog have.

[Manny from Inglewood, because its Real Estate... unlike that other Fake Estate]

Laker you have no F’ing Idea what you are talking about!!
I read your rants & raves every day with your subtle racial overtones.

Just this last week WAMU canceled the 20k line of credit my parents had on their home, this wasn’t from some fake equity, this is home that is less than 10 years from being paid off, My parents are people that pay all of their bills on time.

WAMU is going after everyone indiscriminately, even people in good standing!!

What was chicken-sh** of them is that they didn’t even bother to tell them a head of time,

WAMU said that things had changed in their credit score (false) and said that is why they took the credit line a way. Yet they say that they can not verify their own information. (BS)

So you know what my parents did that day? Bank RUN BABY! BANK RUN!!

Good bye WAMU, Hello my old friend, Credit Union!!!!

F-You WAMU!!!

[puckhead]

"puckhead, the government does not have the money to buy all the mortgage backed securities...if you think they can simply print couple of trillion dollars...that will translate to a 100-200% price inflation...and you will be dreaming about $4 a gallon for gas because it will be $20-30"

Laker,

The govt does not need to buy ALL of the mortgage back securities. They just need to backstop them to create a market for them. Not EVERY house in the USofA is going to go to foreclosure (although I do believe some on this blog will insist they are). Govt can't afford this bailout????? How much do you think we’ve spent in Iraq? We’ll get through Iraq and this mortgage mess w/o the world ending

[ladybug]

On 3/27 I wrote a check for $15,000 from my LOC. (My available credit was 43,000). The person deposited the check in their BofA account on 4/1. On 4/3 he was notified that the check had bounced. I was so embarrassed, I called WAMU my credit line was decreased on 4/2 or 4/3 and now I really only have 2,000. I was quite upset. They then changed their story that BofA submitted the check for payment incorrectly. This issue has still not been resolved, we are still waiting for the actual check to return, WAMU has said that we might be able to redeposit, but am still waiting for another call. I had to speak to several people and then a manager. The worst part is that I know that the decrease was an error. This LOC is on 2 side-by-side properties, when they looked at a new appraisal, it was only the appraisal for one property. So my new Loan to Value is less than 50%, but they are saying it will take about 3 weeks to research and make a decision on that piece of it.
Something else, kind of unrelated/related. I had EMC call me on another mortgage. They called me on 4/8 to tell me that my APRIL payment is late because it was due on the 1st and wanted to know if I wanted to pay over the phone or just use their website to pay it today. I found this pretty outrageous, since for years, I have paid multiple mortgages online using my own bank without a problem. I know they are desperate for cash, but I pay my mortgages "on time", so they should not be bothering me.

[GDC]

It's obvious the banks are in real trouble. They deserve it. Why any bank would make a 0% down loan to subprime people boggles the mind.

I hope that this leads to the most credit tightening environment in history. They should just not make any home loans. If people were forced to buy homes with actual cash they have rather than loans, home prices would drop 80%.

[RadioManTodd]

Heres what I don't get..... if you take out a loan under certain terms (say, up to $69K at X interest), how is it that they can revoke those terms and just change the game mid-course?

How about this:

*knock knock*
Hello. I'm from your mortgage lender. You purchased this house for $500K with 20% down, but now its only worth $350K. We're now going to start charging you PMI unless you can come up with the additional 15% difference.

Memo to Banks: Its your fault. Deal with the consequences.

[Dave]

Carey Parker: "they want me to provide docs, data, verification of income, as if I was the world's worst person."

Let's just pause for a moment and think about what a strange world it is where someone who describes themselves as a "REALTOR" regards it as insulting to be asked for documents and income verification when applying for a bank loan.

The "world's worst people" are on death row. To be asked to provide documentation when you want a bank to lend you money means only that the bank is acting responsibly, rather than throwing money at anyone who wants it.

It wasn't long ago at all that going to a bank for a mortgage was a true process of application (supplication, really) where you'd approach a lending professional with a stack of documents and be carefully vetted to make sure you were a good bet as a responsible debtor. Hell, I had to produce proof of income and other personal documentation when I took out a $10k car loan last year.

The fact that a real estate professional feels entitled to a bank loan no-questions-asked is more evidence that the entire SoCal real estate world still needs a serious reality check.

[arroyogrande]

"I find it amazing how addicted to credit some people are.."

Monkey see, monkey do...change the statement to:

"I find it amazing how addicted to credit some GOVERNMENTS are.."

Good ol' US of A, show your people the way.

- arroyogrande

[Maggie Knowles]

Michael Snyder - I too tried working with WAMU, they offered free business checking. The problem was they held my deposits for three weeks before I could write checks against them. I asked them why they had to hold my funds for three weeks in this day and age. They couldn't give me a good reason. I told them that it was impossible for me to have my funds held for three weeks, it creates a serious cash flow problem. They didn't care. I closed the accounts.

[Cal]

RadioManTodd, your scenario quite simply wouldn't happen. It would be rewriting the mortgage contract after the fact.

Where the HELOCs have provisions written into the contract to be pulled under various circumstances, additional after the fact mortgage insurance is quite simply not a part of the landscape. People have enough issues with you not making up new ones. Stick with the facts.

Usually the HELOCs contain a word for word use of the following phrase (which is demanded by the FDIC when extending credit, I believe under TILA):

______

We can refuse to make additional extensions of credit or reduce your credit limit if:
• The value of the dwelling securing the line declines significantly below its appraised value for purposes of the line.
• We reasonably believe you will not be able to meet the repayment requirements due to a material change in your financial circumstances.
• You are in default of a material obligation in the agreement.
• Government action prevents us from imposing the annual percentage rate provided for or impairs our security interest such that the value of the interest is less than 120 percent of the credit line.
• A regulatory agency has notified us that continued advances would constitute an unsafe and unsound practice.
• The maximum annual percentage rate is reached.

[E]

Oh Lawdy

I'm reading these pathetic sob stories everywhere now.

Everybody claims that their HELOC was a "cushion" to be used for emergencies.

Stupid People....didn't you SAVE any MONEY for emergencies?

Oh...yeah...I guess not. You spent every last dime on frivolities from manicures to lattes! Just listen to the Country Club living realtor who DEPENDS ON DEBT to get by.

Pssssst....

The ponzi scheme is over.

Deal with it.

Get your customers to lower their prices (substantially) and you might make a few sales.

Give it time and all you debt whores won't be whining about losing your HELOCS, you'll be whining about losing your homes.

[sfvrealestate]

I agree with Arroyogrande for once! Anyway, people have always borrowed money from financial institutions for various reasons. And they've put up collateral to guarantee those loans. What's so different about that with HELOCs? If home values rose (regardless of what the posters here think), they rose for the bank, too, and the "collateral" was worth more.

For those of you who believe nobody should borrow money on credit, ever: please! What color is the sky in your world? Ever opened a business, gotten braces for your kids' teeth, bought a car?

[EEF]

Is this even legal? I called my credit union about 4 months ago to ask if they could lower my LOC and I was told "no". When I asked why, I was told that unlike credit cards, HELOCs are recorded and the only way to reduce it would be to refinance. Maybe these people should look at the fine print and research whether WAMU can do this. I've been paying down my loan instead of refinancing. I'm getting ready to call my credit union and ask again about this.

[Laker]

Manny from Inglewood wrote: "...Laker you have no F’ing Idea what you are talking about!!
I read your rants & raves every day with your subtle racial overtones...."

Manny, Since you like so much the F' word, i have no problem with you F' ing WAMU or any bank.
However, i do not rant and rave ! racial overtones?? What are you talking about.
To the point, what makes you think WAMU owes you anything or your parents? They did right and run the bank, and went somewhere else.
The bank gave you credit, they have the right to take it...
Or....maybe the banks know something that we don't...Maybe the banks know that values are going down 50-70%...and they know that all HELOCS, and 2nd notes are worth 0 on the dollar....put yourself in their position, wouldn't you try and limit your future total losses???

The govt does not need to buy ALL of the mortgage back securities. They just need to backstop them to create a market for them. Not EVERY house in the USofA is going to go to foreclosure (although I do believe some on this blog will insist they are). Govt can't afford this bailout????? How much do you think we’ve spent in Iraq? We’ll get through Iraq and this mortgage mess w/o the world ending

puckhead, not every single house is going to foreclosure....but Mark my words! 95% of the houses bought 2002-2007 will !
my family lost a house to foreclosure back in 1994 and that after having $100,000 skin in the game...they actually bought the house in 1990 with $100,000 down payment...
So all the people that bought with zero down...all the smart people will not walk away, they will run away!
It is 100% stupid to keep paying mortgages on 2006 prices...when you bought with no money down...AND that you can simply buy next door house for 40% discount on the spot!

[puckhead]

“puckhead, not every single house is going to foreclosure....but Mark my words! 95% of the houses bought 2002-2007 will !”

Two of my in laws, my nephew and numerous co-workers bought between 2002-2007. None of them will loose their houses. What you fail to take into account is that many, many, many people owned property prior to 2002 and was able roll large chunks of equity into their new homes. And thanks to the generosity of Uncle Alan G, we’ve been able to refinanced our homes down to ridiculously low interest rates and we’ll be able pay off our loans much faster than anticipated. Find me one analysis from any reputable source that predicts that 95% of home purchases within the last 5 years will go belly up. Dude, get out of your bomb shelter and smell the air. The world is not ending. Don’t sell you double wide and move to Idaho.

[coakl]

WaMu is doing the same thing to its small business customers: business lines of credit are being reduced as well.

And just to round things out, they increased their overdraft fee to $33.

As part of their $7 billion bailout this week, they are closing 186 loan offices and canning 3,000 more staff. Obviously, WaMu doesn't see any hope of a near-term recovery in the real estate market.

[NoCal SC]

A realtor writes:

"Anyway, people have always borrowed money from financial institutions for various reasons. And they've put up collateral to guarantee those loans. What's so different about that with HELOCs? If home values rose (regardless of what the posters here think), they rose for the bank, too, and the "collateral" was worth more. "

Right. They put up collateral. If you don't have any equity in your house, you have NO freakin' collateral to put up!! And if banks are forecasting that house values are going to *continue to decline, it's probably a smart move to start reining in the credit extended that was based on those house values.

As far as braces, etc. That's what you *save for. Then, your braces only cost $1500 (or whatever) and not $1500 plus 7% compounded daily.

[peter m]

I have wamu heloc and fixed accts, wamu CC & wamu checking accts.
I don't think wamu will reduce my heloc line very soon. My home would need to take a 90% decline in value for my line to exceed what i borrowed on it. Ain't gonna happen in LA. I can absorb a 60% hit and still come out ahead. Unlike many idiots in LA i am extremely frugal in using helocs. My home is a place to live in, not a cash machine.

[shockg]

Laker and E have the usual diarhea of the mouth. Blah blah bah. Same thing every day Blah Blah. Talk down the market. Blah Blah. Im sure you must have sold your primary residence at the peak and are now sorry for making such a foolish move because prices haven't fallen to levels you gambled on. Oh wait, that would make you speculators. You're poor first-time buyers right?

[IToldu2CashOut]

If Lefty could post live in person it would be called performance art.

Everytime I read something a realestate agent writes on here I start laughing my a$$ off. This new one with the Heloc problems, I hope she sticks around also. Can't wait to hear the next idiotic thing that comes out of her mouth.

[tealeaf]

shockg: still affordability. call me when the pricing is in line with rents.

This may help: use 160x monthly rent for price. It's not perfect, but it's the historical average in LA for over 100 years running. Oh - until about 2001.

Sorry bud - history's just not on your side!

ps we'll "talk down" the market while unprecedented masses "walk out" of the market!

[SoCal Investor]

"The bank gave you credit, they have the right to take it...Or....maybe the banks know something that we don't...Maybe the banks know that values are going down 50-70%...and they know that all HELOCS, and 2nd notes are worth 0 on the dollar....put yourself in their position, wouldn't you try and limit your future total losses???"

Uh no... the bank most certainly DOES NOT have the right to take credit away. Just read your Deed of Trust.... you know... that 1000 page document that you signed when you closed your loan. Typically, the only recourse the lender has to protect their interest, is to lower the borrowing limits on a HELOC. The bank, in writing, has agreed to lend you money based on an appraisal and maximum LTV which they have approved. They are willingly taking the risk and you in return are promising to pay interest to them. If the house declines in value to the point the where LTV is higher than their normal limits, I'm sorry... tough s**t for the bank. I weep not for them!

[Cal]

EEF said:

"Is this even legal? "

Yes.

"I called my credit union about 4 months ago to ask if they could lower my LOC and I was told "no"."

You have a written contract, read it, their words means nothing in this regard.

" When I asked why, I was told that unlike credit cards, HELOCs are recorded and the only way to reduce it would be to refinance."

Completely untrue. Recording a lien doesn't say that the lien balance or limit change. For example, you pay down the balance on a mortgage, does that affect the recorded lien or its validity? How about a negative amortization mortgage, which balance can increase? Recording isn't even part of the equation in regards to what they can and cannot do regarding the limit of the credit extended. It is completely controlled by the legal agreement signed between the borrower and lender.

" I've been paying down my loan instead of refinancing. I'm getting ready to call my credit union and ask again about this."

You should read your HELOC agreement, it will contain verbage like I posted earlier today.

[Cal]

There was an article buried in the WSJ yesterday:

"Habit-Forming:
Borrowers Keep
Piling On Debt

The credit crunch has made it harder for Americans to indulge in their love affair with debt. So what are they doing?

Borrowing more."

http://online.wsj.com/article/SB120779065895103637.
html

It reminded me of a saying (by Mark Twain I believe) : "A banker is someone who gives you an umbrella when it is sunny and takes it away when it is raining"

[bottom line]

Calling EEF, may I explain the confusion. You posted;

Is this even legal? I called my credit union about 4 months ago to ask if they could lower my LOC and I was told "no". When I asked why, I was told that unlike credit cards, HELOCs are recorded and the only way to reduce it would be to refinance. Maybe these people should look at the fine print and research whether WAMU can do this. I've been paying down my loan instead of refinancing. I'm getting ready to call my credit union and ask again about this.

A HELOC is a Home Equity Line of Credit, approved for a set amount, & with widely varying parameters for draws, time limit for loan, payment schedules, etc. You could be approved for $100,000, yet never access any of the draw for years.

What you are referring to is a Home Equity Loan. If you told your bank that you wanted a loan for say $50,000 to do whatever, after being approved, you would get the entire amount, with a fixed or adjustable rate, for a set amortized period, say 15 years, or whatever. After you sign the loan docs, the proper documents are recorded later at the court house, & no, those terms cannot be unilaterally changed. Folks make regular monthly payments on these.

Two different animals, hope this helps. : D ........

[timtooth]

If people would only read the loan docs they sign, they would not be so SHOCKED! when the loanholder does things that are described in the loan docs!

The complainer here is a Realtor. I am quite sure that if they had been paying attention during their training, they would have known how these loans work (and how to read a contract.)

For the future: How about some truly stringent training requirements to become Realtors? Hmmm?

[Edgar]

Lefty's back! Woo hoo!

I love the smell of crazy in the morning.

[Laker]

shockg, "....sold your primary residence at the peak and are now sorry for making such a foolish move because prices haven't fallen to levels you gambled on. Oh wait, that would make you speculators. You're poor first-time buyers right?...."

shockg Realtor, Indeed i sold my house couple years ago...but sorry to disappoint you, it is worth less today that the amount i sold for...I might not be rich, but i'm not poor and not 1st time buyer...You can call me speculator as i'm speculating that home prices will drop to 2001 levels. However, unlike speculators like yourself, I'm not expecting the government to bail me out in case my prediction does not come true....
I have nothing against speculators. All i want it to have them keep the rewards AS WELL AS risks!

[E]

ShockG...

why do you continually mount personal attacks?

I can understand the anger that Realtors have these days.

I really don't care though.

Really...I don't.

And I care even less about people with a feed bag mentality that have overspent themselves into debt misery.

[shockg]

shockg Realtor, Indeed i sold my house couple years ago...but sorry to disappoint you, it is worth less today that the amount i sold for...I might not be rich, but i'm not poor and not 1st time buyer...You can call me speculator as i'm speculating that home prices will drop to 2001 levels. However, unlike speculators like yourself, I'm not expecting the government to bail me out in case my prediction does not come true....
I have nothing against speculators. All i want it to have them keep the rewards AS WELL AS risks!

I knew it. The point you are not addressing is that for you to even break even after paying all the transaction costs, moving costs and rent on your 300 sqr foot apartment, you NEED prices to drop significantly below what you sold for at the peak. Even lower if you still expect to make a fat profit. And lets not forget that in the meantime you are getting hammered on taxes. I would be mad too if I was you. I would be mad at myself for being so foolish! Your motivations are now very clear to all!!!

[Laker]

shockg,
I currently rent a 2500-3000 sf house in south of the bl tarzana. I pay half of the mortgage for similar house.
I'm already well better than break even - right now $150,000 net and counting up...
I'm not getting hammered by taxes...i have other deductions and credits that ease the pain...and i don't have property taxes....
My motivation is to see all the greedy and fraudsters paying the price. I want all the prudent people to get rewarded and i want all the speculators to pay the consequences.
I also want all the used house salesmen to get back in line and start being productive.
And lastly, i want to have all our politicians voted out of office. Vote out all incumbents.

[EEF]

Thanks for trying to clarify things for me (?) I need no help. I do have a HELOC and I don't want it. I'm closing it down when I pay it off. Unlike some, I want my line of credit lowered and was surprised when I was told it couldn't be done. Obviously, not all contracts are the same, and the terms and conditions of my loan may be different. However, if I were in these people's shoes, I would review my documentation and make sure the bank is acting legally.

[Cal]

This letter from Citi is making the rounds on the broker boards:

"HELOC Reductions/Suspensions

April 14, 2008

Citi Home Equity has recently reviewed certain existing Home Equity Lines of
Credit (HELOC) in light of recent real estate market conditions. In accordance
with the terms of these loans, Citi Home Equity has taken steps to limit new
draw activity upon these loans. These actions limit new draw activity, and do
not impact existing balances. Borrowers are expected to pay their current
balances per the terms of their loan, and will receive a letter with the details
on their specific line if it has been impacted.

A customer service phone number is provided to the borrower in their letter.
If you are contacted by a borrower who has been impacted by these events,
we ask that you have the borrower call our customer service line if they have questions or concerns. Please remember that due to financial privacy
requirements, Citi Home Equity will only speak to the consumer about their
account. Citi Home Equity is unable to discuss the borrower's account with you.

We appreciate your business, and look forward to continuing to serve your
first mortgage needs."