National City Corp. , which is among the U.S. banks hit hardest by the subprime crisis, is trying to reduce its exposure to some home loans by offering customers cash to close their untapped home equity lines, the Financial Times reported.
The bank is offering to waive closure fees and write customers a
$200check to close "open-ended" home equity lines - which are committed but as yet undrawn - the FT reported on its Web site late Wednesday, citing National City .
The program in essence buys back the borrower's right to access the line and reduces the bank's exposure to lending money against houses that have fallen in value, the FT said.
Actually this seems like a smart way of handling a difficult situation. They are giving money to people who had probably had no intention of using the funds. They are not just closing lines recklessly - opening themselves up to future lawsuits and angry customers.