Still getting our HELOC fix

Like any addict, even when they know they are wrong and need to quit it is just to hard. Some beginning quitting by cutting back and others go cold turkey. In this article from CNN Money we can see that homeowners are starting to cut back in their equity withdrawal addiction. Withdrawal from withdrawal as the case may be. The article is titled Cash-out refinancing loans shrink sharply. Before even looking at the article - one obvious reason for this that with the falling real estate values there is no equity left. Now lets look at what the article says -

The percentage of homeowners who refinanced with a Freddie Mac-owned loan in the first quarter of 2008 and received mortgages with loan amounts higher than their original mortgages, fell to the lowest levels since early 2004.

New figures show that 56% of homeowners with Freddie Mac owned loans received more than $29 billion in home equity through refinancing in the quarter. This represents the smallest cash-out refinancing percentage since the second quarter of 2004. In the fourth quarter of 2007 77% of refinances involved cash out.

Because credit has become more difficult to get, the quality of borrowers qualifying for cash-out refinance loans has significantly increased, said Mark Zandi, chief economist for Moody's Economy.com.

"Lenders are only refinancing those with 50% equity or more," he said. "There are a lot of home owners out there who don't have any debt besides their mortgage."

Our debt-infused spending frenzy during the Great Housing Bubble is coming to a close. Like most addictions that start out socially acceptable until the addict reaches the bottom. They are in trouble, in to deep and need help. And the withdrawal symptoms are always dreadful. Obviously, the only there are those who really did not indulged or never became addicted in the first place. If banks are to those who have 50% of equity available they are targeting people who never had a problem in the first place.