Do you have a CA mortgage home equity line of credit (HELOC) which has been closed or reduced by your bank? A big headache to current homeowners: the current financial mess has created a credit crunch and the addition of the economic recession on top of it has lead lenders to start closing or reducing many consumers HELOC’s (Home Equity Line of Credit) without any notice whatsoever; and often times for no apparent reason as the asset which serves at the collateral, your home, has not lost the value their computer models are saying.Here are 5 quick tips on how to deal with these changes:
Read EVERYTHING you get – your lender who services your HELOC must provide you with written notice if it has closed, frozen or reduced your HELOC, within 3 business days after the closure, freeze or reduction. Read everything from beginning to end mailed to you.
Make that call – your lender who services your HELOC has every right to close, freeze or reduce your HELOC, no matter what your payment record with them is. If you have not had a substantial change in your financial situation, your home has not lost the value they are stating or you just simply want to know why – make that call to your loan servicer. And get answers.
Ask – don’t be afraid to ask for a reversal or reinstatement. The lender must reinstate your credit usage when the “conditions” they stated for the reasoning of the freeze or reduction no longer exist. This may be done by phone or they may request it in writing.
Communicate – the notice the lender sent you mentioned in Tip 1 above should contain the reasons they closed, froze or reduced you HELOC. If not, see Tip 2 and find out why. Often times, the banks are going off of computer generated valuation model which don’t really take into account any home improvements, pool additions etc. which you might have made which would effect the value of your home. If it’s your credit scores, request them and find out what happened and try to find ways to improve your scores. Communicate with your lender….it may not always work, but it’s worth the effort.
You May Pay Some Fees – if a new appraisal is needed to prove the value of your home or new credit reports need to be run, there may be some unfortunate fees you will have to fork over. By law though, the lender cannot charge you a “reinstate fee” of any kind once the condition or reason of the frozen or reduced HELOC is no longer in existence.
I hope these 5 little tips will help you out with your situation if you are one of the unlucky. It’s an unfair world out there in the financial markets nowadays. Having the knowledge will keep you from getting run over by the “big guys.”