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HELOCs being shut down

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HELOCs being shut down

Unread postby I_Like_Plants » Sat 02 Feb 2008, 17:18:00

OK turns out I duplicated another ongoing thread, the one about Egg credit cards ... sorry all.

So let's talk about the shutting down of HELOCs, it appears what is happening is the banks are not letting people take funds out of their Home Equity Lines Of Credit. They're restricting amounts, in some cases just plain shutting 'em down as far as withdrawals go.

Another thing they appear to be doing is making offers, like if a person has $100k balance on their HELOC and they can come up with a fast $50k, they can pay it all off for that.

This reminds me of the 50% off offers I"m getting, except they can just go fish, I don't have it.
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Re: HELOCs being shut down

Unread postby Tyler_JC » Sat 02 Feb 2008, 19:18:34

$this->bbcode_second_pass_quote('I_Like_Plants', 'O')K turns out I duplicated another ongoing thread, the one about Egg credit cards ... sorry all.

So let's talk about the shutting down of HELOCs, it appears what is happening is the banks are not letting people take funds out of their Home Equity Lines Of Credit. They're restricting amounts, in some cases just plain shutting 'em down as far as withdrawals go.

Another thing they appear to be doing is making offers, like if a person has $100k balance on their HELOC and they can come up with a fast $50k, they can pay it all off for that.

This reminds me of the 50% off offers I"m getting, except they can just go fish, I don't have it.


Good question.

I believe that the lender can't openly violate the terms of the loan and demand immediate payment of the full amount. If a borrower is making the monthly payments, I think they have to (will) just leave him or her alone.

However, they probably can say that the loan amount is frozen and they no longer can take out more debt on their HELOC. I'd imagine that banks will try to do this if people are trying to borrow more than the home is worth (or will be worth in the next year)
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Re: HELOCs being shut down

Unread postby Twilight » Sat 02 Feb 2008, 19:22:40

It depends what the terms are. In most cases I expect the small print will say the loan can be called in at any time of the lender's choosing, in full.
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Re: HELOCs being shut down

Unread postby MD » Sat 02 Feb 2008, 19:36:55

$this->bbcode_second_pass_quote('Twilight', 'I')t depends what the terms are. In most cases I expect the small print will say the loan can be called in at any time of the lender's choosing, in full.


Nearly all cases, in fact. All types of credit lines also, not just home equity.
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Re: HELOCs being shut down

Unread postby Twilight » Sat 02 Feb 2008, 19:46:14

$this->bbcode_second_pass_quote('MD', '')$this->bbcode_second_pass_quote('Twilight', 'I')t depends what the terms are. In most cases I expect the small print will say the loan can be called in at any time of the lender's choosing, in full.

Nearly all cases, in fact. All types of credit lines also, not just home equity.

Yes, that's pretty much what I thought. People have grown complacent and come to view credit as a service to which they are entitled, much like a utility. Wrong! Many are going to find that needing it to survive does not make an argument. I cannot believe some of the stupid stuff I am hearing from politicians tonight. Here's hoping the FSA tells them to go back in their corner.
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Re: HELOCs being shut down

Unread postby cube » Sat 02 Feb 2008, 21:34:26

$this->bbcode_second_pass_quote('MD', '')$this->bbcode_second_pass_quote('Twilight', 'I')t depends what the terms are. In most cases I expect the small print will say the loan can be called in at any time of the lender's choosing, in full.


Nearly all cases, in fact. All types of credit lines also, not just home equity.
I'd like to add to this that the most common way a person "pays off" the loan on a home mortgage is not necessarily paying off their home per say....but instead refinancing.

Suppose the central bank cuts interest rates (like now) and you want to take advantage of the lower rates. If you "refi" your home mortgage you are basically "paying off" the current loan and getting a new loan with different interest rates.

Lending institutions make their bread and butter by YOU paying interest. That's why they don't want people paying off their loans early. I don't know if they can legally make it impossible for you to pay off a loan but they can add a penalty clause that basically says you have to pay a fee so exorbitant.....it is not worth it.
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Re: HELOCs being shut down

Unread postby jlw61 » Sun 03 Feb 2008, 08:38:50

$this->bbcode_second_pass_quote('MD', '')$this->bbcode_second_pass_quote('Twilight', 'I')t depends what the terms are. In most cases I expect the small print will say the loan can be called in at any time of the lender's choosing, in full.


Nearly all cases, in fact. All types of credit lines also, not just home equity.


It also depends on the state. Here in Virginia, home loans are protected from the creditor to calling in the loan unless you fall behind on payments. Even if the value of my home went to zero they could do nothing as long as I kept paying the monthly payment.

When I lived in Wisconsin, creditors could call in the loan and occassionally did when it was to their advantage.
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