Thursday, May 7, 2009

HELOC Lockdowns Still Surprising in NJ

We have been running stories for over a year now of homeowners having their HELOCs suspended or closed down. Yet the news media still finds people who are shocked, yes shocked, that this is happening. Perhaps a year ago this was an interesting news story - but now, still? Evidently for one of our fellow Jerseyians this is still a big news story - enough to make the news. In an article and video (sorry not embeddable - following the link) from Philadelphia CBS 3 report titled 3 On Your Side: Home Equity Loans we were about the local story. Let's take a look -

Joanne LoBuono bought her New Jersey home as a fixer upper. And for the past decade, she's been paying for the repairs with a home equity line of credit.

She met with a banker last month to check on her account.

"She went to look at my line of credit and couldn't open it. She kept saying , 'gee, this is strange, it's blocked," said LoBuono.

The bank had taken away her line of credit.

Her home value is now not worth enough to secure the loan, so the bank cut her off.

Since the mortgage meltdown, banks are re-evaluating their home loans. In Joanne's case, it came as a complete surprise.

She received the letter from the bank informing her a week after finding out. But do people really believe that banks will give notice before closing off the access? That would not make any sense - most people would take everything they had and put it somewhere else if they knew their lines were going to be closed.

There are many on-line sources where people can see the estimated current estimated value of their property. Take a minute over at RealtyTrac's Home Value page and see how much your area has declined. Then you will not be surprised when you receive that letter in the mail...

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