Released: July 06, 2008

Home equity door slams shut

Source: Pat Mertz Esswein, Kiplinger's Personal Finance [Washington Post] (Free Registration)

Some 122,000 borrowers with Countrywide home-equity lines of credit, or HELOCs, received letters in January informing them that they could no longer withdraw funds from their lines. A few months later, thousands of customers of other major lenders—including Bank of America, J.P. Morgan Chase, Citibank, SunTrust, USAA, Wachovia, Washington Mutual and Wells Fargo—also received notice that their lines had been frozen or reduced.

It’s a jolt to borrowers who have relied on their home-equity line as an emergency fund or an all-you-can-eat buffet.

Home-equity lenders’ anxiety has soared along with mortgage delinquency and foreclosure rates.

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