Thud !

[SoCalDem]

(the sound of another shoe dropping..a Ferragamo or two)




http://online.wsj.com/article/SB121807260101419155.html?mod=googlenews_wsj


Even the Rich Get Home-Equity Yanked
By MARSHALL ECKBLAD
August 7, 2008; Page C3

Wall Street firm Morgan Stanley added some of its well-heeled clients to the long list of customers whose lenders have frozen or reduced their home-equity loans.

While federal laws do not allow lenders to force responsible borrowers to repay the loans immediately, those same federal statutes allow lenders to reduce or eliminate customers' home-equity lines of credit if the lender can reasonably determine that a borrower's home has fallen in value. "A segment of clients was recently notified of a change in the status of their home-equity line of credit due to a change in the value of their property and/or their credit profile," a spokeswoman for Morgan Stanley said.

Many other lenders, including J.P. Morgan Chase & Co. and Washington Mutual Inc., have recently made similar statements, as they've moved to reduce the credit available to borrowers in declining housing markets. Home-equity loans use a borrower's home as collateral, of course, but typically only the portion of the home's value that exceeds the balance of the borrower's other mortgages.

"If the equity cushion goes down in value, then the lender holding the line of credit has concerns," says Don Lampe, a partner at law firm Womble Carlyle in Charlotte, N.C

snip


...........................more articles.............................
http://news.google.com/news?hl=en&tab=in&ned=us&q=home+equity+lines+frozen&btnG=Search+News
This is the sound of CREDIT CRUNCH…
istockAnalyst.com, OR - Aug 6, 2008
Bank of America and Washington Mutual Inc. are among the other lenders that have frozen home-equity credit lines this year.” I also really love how the Fed ...

Fed continues to stand pat on interest rates
USA Today - Aug 5, 2008
Some lenders have stopped offering home equity lines, and others have frozen home equity lines for their existing customers. Some more economic news came ...

Cuts to home equity credit catch some off guard
Columbia Daily Tribune, MO - Aug 4, 2008
One client of his recently had a line frozen even though he earns a hefty paycheck, has substantial equity in his home and has "perfect" credit. ...

The Home-Equity Door Slams Shut on Many Homeowners
KREN CW 27 TV, NV - Aug 4, 2008
Some 122000 borrowers with Countrywide home-equity lines of credit, or HELOCs, received similar letters.. A few months later, thousands of customers of ...

Should You Tap Your Heloc Before it's Frozen?
Conde Nast Portfolio, NY - Aug 6, 2008
The home equity line of credit, or Heloc, is a wonderful thing: the best way of having liquid funds available in case of emergency you could possibly ...

Tapping home equity? Good luck
Sarasota Herald-Tribune, FL - Jul 31, 2008
"Home equity has shrunk so much that big banks like B of A have pulled back or frozen outstanding lines." "It's a major issue that reaches a lot of people," ...

Feds to freeze IndyMac's home-equity credit lines
Los Angeles Times, CA - Jul 13, 2008
... M. Kristof: --Customers with home-equity credit lines will have their accounts frozen and "reviewed on a case-by-case basis," according to the FDIC. ...

IndyMac Bank reopens after seizure Xinhua
FDIC Tries To Calm Fears About New IndyMac KMBC.com

Pacific Daily News, GU - Aug 2, 2008
s Frozen home-equity lines of credit. Because of the sharp decline in home values, lenders have frozen thousands of borrowers' home-equity lines of credit. ...

[ccharles000]

1. ....

I hope this credit thing ends soon.

:hi:

[SoCalDem]

2. So do I, BUT when it does there will be millions of very unhappy folks

People in their early 40's & under have never known an adult life without a wallet full of plastic.. How they will cope with the fact that if they don't have the cash, they cannot buy it, is going to be ugly to watch..

AND, they will find this all out with the full load of debt for stuff they have been "paying on" for years, and will still have to pay on, so there will be NO extra cash to buy ANYTHING..

Look for a whole shitload of stores to close, and since we have more or less existed for 3 decades by selling to and servicing each other, it will be a severely hard landing, indeed.

My new daughter-in-law works at a spa, and she's had a lot more "time off" than she used to.. People are cutting back on the beauty treatments they used to have every week..

They are newlyweds, so she's ok with having time, but she's also had no luck so far in getting her first :real job".. She went to beauty school and college at the same time, so she could control her hours as a hairdresser, while she went to college, and now she's going to pay a heavy price.. She's 29, and just finished college..debt free, but it took her so long to finish, that she's now faced with the "clock" issue too..Does she toss aside that degree she worked so hard for, and have a baby, or does she try for that career, and juggle daycare and the possibility of infertility?..or does she stay at the spa, and kick herself in the ass for wasting all that money and time on college?

[Liberal_in_LA]

3. I can't believe people would pull out equity to pay for tables, lamp and chair! sheesh.

Cuts to home equity credit catch some off guard


McClatchy Newspapers
Published Monday, August 4, 2008
CHICAGO - When Denise Lopez bought two tables, a lamp and a chair, her intent was to finance it with her home equity line of credit. But it wasn’t long before she discovered that wasn’t an option - her HELOC had been frozen.
http://www.columbiatribune.com/2008/Aug/20080804Busi009.asp

[SoCalDem]

4. Equity loans should ONLY be for improvements to the home

like new A/C, new roof, additions, remodels etc..

When we did a re-fi (I think we were the last people on earth to do one) they kept pushing for us to take more, but we only wanted what it cost to re-roof, do some concrete, replace the A/C system, and remove a dead tree.. We have been in this house since 1982, and they kept trying to get us to take more..
Even de-valued, we have plenty of equity and could sell for a pretty cheap price if we had to..and still come out with some money.. We bought this house to LIVE in..not to live ON:)

[mikeytherat]

6. You weren't the last to re-fi! We closed on July 28.

We cashed out and EVERY DIME is being plowed right back into the house - new siding, windows, doors, roof, upstairs heat pump.

mikey_the_rat

[Liberal_in_LA]

11. You were smart.

[DemoTex]

5. Thud!

F-105 Thunderchief (The Thud)

[KharmaTrain]

7. Get Ready For Higher Charges

Those are the big money makers for banks. Home equity has been a "big seller" for over 20 years. I know a few who took out one to help pay for their kids to get through college. No surprise that the credit crunch is hitting here, but it means the bank is gonna try to make up the difference other ways...higher charge and minimum balance on checking, extra fees for using a credit or debit card and on late fees and overdrafts.

Check your statements...and keep checking them...it's times like these that those little "surcharges" can show up.

[Liberal In Texas]

8. Get out of the bank rut and find a good credit union.

Leave your current loan and safety deposit boxes at the bank and get your checking, savings and other needs taken care of by a CU. They may even have a better rate on a loan to pay off the bank one.

[KharmaTrain]

9. I'm Diversified

Fortunately, I don't need a loan and have had a Credit Union account for over 25 years. They do have better rates, but also limited services. They're like the old S & Ls...they don't handle much as far as financial planning or investing. But your suggestion is a very wise one to those who aren't as fortunate.

What the real irony is...due to the amount of business I do with my bank, I get free checking and reduced rates on loans. I've never thought this was fair...and why I got into a CU way back when. Again you offer solid advice to those who have access to a Credit Union.

Cheers...

[Liberal In Texas]

10. And "Cheers" right back at ya!

It sounds like you have a good handle on it. I got tired of those "extra" charges the bank would keep throwing in back in the '80s. Fortunately, my company had a relationship with a CU and I tried it out and never went back to the bank for my checking/savings/ATM/credit cards etc.

These days, it's much easier to get access to a CU. Almost anyone can find one that will sign them up.