Home Equity Lines Pulled
First the banks won’t refinance, then they won’t restructure mortgages, now they’re pulling out all stops in this mortgage mess. They are pulling existing home equity lines of credit. That’s right, in a feeble attempt to save their sorry asses and limit credit losses, you are going to get the shaft. It’s called deleveraging. And, it’s coming to a home equity loan near you.
Washington Mutual Inc. has slashed or suspended $6 billion in available home equity credit to its customers in an effort to reduce its risk in a flailing housing market.
If they haven’t already been notified, WaMu’s customers across the country will learn of the change to their credit availability in a letter mailed to them in the next several days. The bank declined to disclose how many customers will be affected.
If a borrower’s home has depreciated — regardless of credit history — the line of credit will likely be reduced because the equity has fallen.
–Wichita Business Journal
It’s not like they are the first. Countrywide did it, Bank of America did it.
But how is Washington Mutual going to determine whether you home has depreciated in value? By how much? They are covering their own backsides, plain and simple. And they have every legal right to do so. This is why deleveraging hurts.
Watch out, homeowner’s. The housing ATM is running out of money.