A newly filed lawsuit will now challenge a Cleveland bank's decision to cut home equity lines of credit, reported chief investigator Duane Pohlman.
AmTrust suspended credit to countless homeowners, citing a drop in home values across the area.
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At the center of the lawsuit is a critical question: Can a bank freeze off equity lines of credit without ever re-appraising your property?
Don Saunders, a Bedford city councilman, tapped his home equity line of credit to remodel his kitchen.
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Cleveland-based AmTrust Bank sent a letter telling Saunders his equity line was suspended because of a decline in home values across the entire area.
But Saunders said he's made major improvements to his house and said his home value has actually gone up.
Of course the lender would not comment on the pending lawsuit. But the article includes the website for the suit - www.landskronerlaw.com - perhaps more people will join as word spreads.
Most lenders have done the cost-benefit analysis and are betting the money saved on freezing the HELOCs is more than the lawsuits would cost. Not everyone that has the line arbitrarily shut down will partake in the lawsuit. But many of these cases are strong so it will be interesting to see how these play out.
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