Monday, July 14, 2008

Forget about that IndyMac HELOC

With the Fed takeover of IndyMac the announcement of HELOC lines getting shut down is not really a surprise. The changes over at the new "IndyMac Federal Bank" include the freezing of home equity lines and construction accounts. The Las Angeles Times has a good rundown of all the latest developments in an article titled Home Equity Lines Frozen At IndyMac. Lets take a look at the article -

During a news conference at the bank's Pasadena headquarters, officials of the Federal Deposit Insurance Corp. sought to assure customers -- at least those who had less than $100,000 deposited or less than $250,000 in a retirement account -- that their money was safe and would be fully accessible today.

But it won't be business as usual if you were planning to borrow more on an IndyMac home equity line.

"Home equity lines will be frozen and reviewed on a case-by-case basis," said David Barr, an FDIC spokesman.

Lines of credit to commercial construction contractors also will be frozen pending a review, but construction loans made to individual consumers won't be affected, he said.

Customers of IndyMac's reverse mortgage subsidiary will retain unfettered access to their funds, Bovenzi said. Reverse mortgages provide elderly homeowners with either regular payments or a line of credit, secured by their homes. The loans do not have to be repaid until the homeowner dies or chooses to move.
More frozen HELOCs. Maybe with all of the headlines we won't be reading about customer's shocked to have the lines closed. Now the Feds have to review all of those liars loans. Were some of the HELOCs also liar loans? This is a story we have to watch and see what unfolds.

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