Mass Freezing of Home Equity Lines

[jeffrey]

It was the lending institutions and mortgage originators that got the United States into this credit mess, but it is the American consumers, taxpayers and those companies' shareholders who will end up shouldering most of the costs.

The latest example of this is in the mass freezing of home equity lines of credit going on across the United States. Reeling from losses on their wretched loan decisions of recent years, lenders are preventing borrowers with pristine credit and significant equity in their homes from tapping into credit lines that they paid dearly to secure.

In the past 30 days, lenders have sent several hundred thousand letters advising borrowers that their home equity lines of credit are frozen, estimated Michael Kratzer, president of FeeDisclosure.com, a Web site intended to help consumers reduce fees on home loans.

U.S. lenders freeze home equity credit lines - International Herald Tribune

[Brokemofo]

Yeah, I keep getting calls from really pissed off clients asking why their lines were frozen. I thought it was just our bank doing it. I had a guy in California have his line limit dropped from $1,000,000 to $16,000 overnight. They froze one of my co-workers lines of credit he was about to use to finish some home improvements. In fact, he was about to write a check to pay the contractor for work already completed. Now he can't pay the contractor, or finish the job. He said he would go get another heloc from another bank, and our bank is going to charge him an early closure fee if he gets a new heloc. What a joke! Nice way to treat your own employees.

[LuxLiving]

Broke, it sounds as if your co-worker might have an actionable lawsuit. He needs to be re-reading the fine print on what he signed.