Frozen HELOC’s squeezing Phoenix area Home Owners

July 1, 2008

Lenders are cutting off more and more Home Equity Lines of Credit (HELOC) here in Metro Phoenix as home prices decline across the valley cities of Mesa, Chandler, Gilbert, Peoria, Tempe, Fountain Hills and even Scottsdale and Paradise Valley. mortgage banks freezine homeowners credit

‘Freezing‘ Home equity lines is a new phenomenon that has always been, but seldom used, option contained in the small fine print of complex and lengthy mortgage and loan documents allowing lenders to reduce limits or freeze completely HELOC’s if home prices decline or consumer credit drops.

Although, some borrowers used the money to buy luxury items, most people use the money for renovation, pay down higher debt or emergencies.

Lenders are cutting or freezing these home equity lines of borrowers who are in need of money that they can afford to borrow.

Further, this inability to access needed credit is compounded by the fact that mortgage Re-Financing, the other popular option to extract equity is more difficult. Again, putting homeowners in a precarious situation.

Now, credit card companies are reducing borrowing limits in greater numbers than ever before.

I agree that the ability to receive credit was much to accessible , in too large amounts, to many borrowers who could not afford the loan amounts.

I also agree that lenders need to protect themselves from losses.

The majority of home buyers in metro Phoenix followed the rules and were prudent in their borrowing habits. However, today need the money to pay for consumer staples, (not luxuries) to get through a difficult time.

Too many borrowers are suffering as a result of poor lending practices, dishonest borrowers, and greedy investors who purchased homes or re-financed mortgages that they are walking away from.

Credit card companies and Mortgage banks need to keep their promise to lend,…if the borrower is still in the same economic situation when the loan was originally made.

I encourage banks to look at a case by case basis when making such drastic cuts.

If you want to know more about options when your bank freezes your Home Equity Line

For further expert advice on mortgage re-financing and Home equity lines of credit …

You can speak with any of these professionals:

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Copyright © 2008 By James Wexler, All Rights Reserved. *Frozen HELOC’s squeezing Phoenix area Home Owners*

Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs.

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Written by James Wexler · Filed Under Articles, FHA/VA Loans, Lending / mortgages, Qualifying for a mortgage 

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