Get your HELOC turned back on on clarkhoward.com

Clark's been receiving a lot of calls from listeners who had HELOCs (home equity line of credit) shut off with no notice -- sometimes in the midst of a renovation!

Now it turns out this practice is illegal. New federal guidelines* have been issued that forbid banks from redlining via zip code, via state or any other blanket method. They are not allowed to arbitrarily shut down HELOCs in a neighborhood where home values are dropping.

If a bank wants to curtail your HELOC, they must look at your house and circumstances on an individual basis. So if you got the squeeze, go talk to your loan officer and get it rectified. They are required to restore your HELOC -- unless they have individual proof for your address or your situation that compelled them to cut it in the first place. Get in there and fight for your rights!

* Note that this is a pdf file.

What others are saying

HELOC Suspended
I received my suspension letter from BOA last week. I am a responsible homeowner who has done 27K of renovations and paid for them on my own; only owe $1,200 on my HELOC from my recent bathroom remodel (19K credit). My credit score stay in the 800s; I sent in for a report yesterday to check on things currently. But where do I start my fight against this??? I am very upset. I hardly ever touch the HELOC but it was nice to have the secuirty that it was there...
By V. Meeks @ 11/17/09 08:47:43 AMreport abuse
Heloc's ~ update
Went to the bank, and spoke to them on how to regain my LOC, they advised me while I have zero debt the potential was there. They advised me to reduce credit limits, and close some accounts. Did all they advised, and since paid off my truck. The HELOC decision was reversed and my actual FICO score increased due to it. Now just 2 credit cards, no truck payment and ONLY the house note. Laying low. THANKS CLARK.
By wil keheley @ 10/01/09 02:24:41 PMreport abuse
Heloc/blocked BOA
Less than a year ago we took out a Heloc with BOA - access now blocked- they indicate drop in property value will not disclose how they came up with new value. We have used about half of the money and been paying one time and ahead on principal. Asked if this will affect credit score they say can't disclose and we should contact Trans Union. Their website indicates they use CyberHomes.com to make valuations - would not disclose on phone they use this site. On this site our house is worth 50,000 less than even the county's appraisal. We will be shopping for a new mortgage somewhere else - but now probably won't get the best rate.
By P.K. @ 08/31/09 09:43:48 AMreport abuse
Citigroup closed our line of equity
We received a very nice letter thanking us for responsibly using our HELOC. But, since home values have fallen, we should shred the rest of our checks as they would not be honored. If we want to reinstate the line, it will cost us money. We have equity, and I'm worried about how this might affect our credit score. After reading this, I'm going to fight!
By Karen @ 08/28/09 12:10:39 PMreport abuse
Suntrust closed our line of equity
Great article! I heard this topic on the show a few months back and this week we got a letter from Suntrust that they closed our 11k line of equity that has a 0 balance. I put 40k into our house and we bought it 1 year ago. We have equity!
By Judy @ 05/26/09 09:12:49 PMreport abuse
Wachovia Froze my Equity Line after 10 months
Wachovia froze my line in just 1O months time. I paid these clowns $350 for an appraisal last June and they are now telling me that my house has dropped in value by $100K in barely 10 months. They are insane! Now they want me to pay them another $350 because their electronic appraisal system is messed up - No way!
By Trey @ 04/09/09 08:01:13 PMreport abuse
Suspended HELOC Chase Bank
I have had a heloc for 5 yrs, never used it and now its suspended. What I am told is the value dropped 6K since 04. I owe 60K less than what they state for 04. I have 64% equity in my home. I am ticked off. Chase said to get an appraiseal and if its up 6K then they will reinstate the heloc. I have two other mortgages with chase, which I should pull and refi.
By Dawn @ 04/01/09 01:19:56 PMreport abuse
Frozen HELOC
I tried to (silly me) cancel my HELOC because of the $50/yr. membership fee.
Much to my dismay, the HELOC sent me a Payoff Statement letting me know my account was frozen. Only when I called did they let me know a LIEN had been placed on my home. I just wanted the availability of funds for emergency purposes. I tried this last year and the monthly charges were so ridiculous I told them "no thanks". Where do I go from here?!
By Jane Price @ 03/26/09 04:15:00 PMreport abuse
Home Equity Line of Credit complaints
If your HELOC or home equity line of credit was frozen, suspended or reduced by your mortgage lender or bank, you can share your home equity line of credit or HELOC complaints with other HELOC borrowers whose HELOCs were frozen:

http://heloc-complaints.com/

You could also try contacting class action attorneys investigating HELOC freezes:

http://www.classactionconnect.com/?q=node/751
By HELOC freezes and suspensions? @ 03/24/09 06:20:54 PMreport abuse
Leaving WAMU Forever
Washington Mutual froze my HELOC when I have a zero balance on the account and only have it there for an emergency. I have over $100K equity in my home and over 800 credit rating. I'm closing all my accounts with Washington Mutual. Let them keep the customers who got them in trouble in first place. They shouldn't punish me when I've been frugal, honest and fair.
By Brett @ 01/17/09 12:32:11 AMreport abuse
HELOC
It would be nice if someone could tell us how to actually fight for this right. I fought, and my bank basically said we will not reinstate your heloc unless you can provide proof of the value of the house. That means paying for an appraisel.
By Corey @ 01/13/09 04:58:08 PMreport abuse
HELOC
Wait, this advise is from the same man who has been telling me for years to not get a home equity loan? Make up your mind Clark. I know it's my right to get in debt more, but do I want to fight to get in debt more than my home is worth? Please advise, I'm confused.
By Susan @ 09/08/08 11:15:59 AMreport abuse
HELOC
I hAD CALLED THE bANK sUNTRUST AND THEY INFORMED ME i WOULD HAVE TO PAY FOR AN APPRAISAL OF 240.000 bASED ON THE FACT THAT MY Home to value is at 85% and when I had gotten the Loan it was at 78% So with that what could I do about getting my money reinstated with out any other fees????
By Mary @ 09/02/08 11:44:07 AMreport abuse
Wamu
I received the letter and had 15k taken away in the middle of a remodel. I used an appraiser to try and obtian the loan back Next I was told then I was told I had to use the bank's appraiser after I had paid $ 350 for the appraisal.
By Jules @ 08/30/08 03:43:47 PMreport abuse
$300 Cancellation Charge
I received one of those letters several months ago. Since I did not want to pay for a re-appraisal, I sent them a letter to asking them to close the account.

I did not realize that the account had a $300 penalty if closed within two years. Obviously, I would never have closed the account if I had not received that letter.

Do I have a case to get my $300 back?
By John @ 08/29/08 04:23:06 PMreport abuse
Confused
Does using an “automated valuation method”, where they take the average sale price in the neighborhood for last six months and compare it to a home value count as a blanket method?
By Confused @ 08/29/08 09:57:21 AMreport abuse
Called BofA
Called today, and they are faxing me a reinstatement form. That will take 10 days to process, and then someone will contact me to do a walk through assessment. I did not get immediate reinstatement, and I am pretty sure they will not reinstate, but instead have the appraiser come out with numbers they want to see. Sucks for me, I was expanding my business with my $50,000 equity line, and they cut me down to $7500. No bigger Business, less Money coming in...
By Yvonne @ 08/28/08 07:22:25 PMreport abuse
HELOC
Tried this with Chase, they refuse to tell me how they determined property value decline for my specific property. Told me if I didn't like it, I should pay for an appraisal and appeal their decision.
BTW: They also went over the paperwork and determined that they had made an error and I owed less than they thought, so they recalculated and I got more of the HELOC back but not all...
It's a game to them.
By mary @ 08/28/08 03:01:25 PMreport abuse
HELOC RegZ
I called IndyMac today & brought up this document from the OTS (Office of Thrift Supervision, US Dept of Treasury). The agent seemed to be surprised a bit.

Note: My notice from IndyMac indicates that they will 're-evaluate mkt conds in your area' - this is at odds w/ OTS' Guidance document which states that Reg 'Z' does not permit HELOC suspension based on values in a geographic area. As Clark pointed out on the radio, Reg 'Z' requires a valuation of the specific property.

So, we'll wait for the week's correspondence. I didn't get a committment to re-instate my HELOC, but figure that will take a letter or two. Seems like an interesting little chess game coming up. Will report later.
By JA P @ 08/28/08 12:04:31 PMreport abuse
HELOC shut off
Banks should be ashamed for cutting off HELOCs to qualified customers. How does this awful practice affect their credit score? What happen regulatory oversight? The:OCC,FEDERAL RESERVE,OTS!!
By Jim Pinckney @ 08/28/08 10:48:36 AMreport abuse
Home Equity Loan
This is good news - Bank offer the loan charged me $1200 closing - I never touched the line and then they say to bad no loan and I still owe the closing costs. This first thing government has ever done for me. They got it right this time.
By Jim @ 08/27/08 10:30:49 PMreport abuse
Get You Facts Straight
Banks are not loaning money they don't have Greg, they have to honor the loans they already agreed to give. If they are in hot water over this, it's because they were idiots to give some of credit out in the first place, but the answer is not to screw everyone who is a neighbor of the person that got into trouble.
By Nessy @ 08/27/08 08:56:01 PMreport abuse
HELOC - Closed via letter
In calling the bank, they denied this and said they could close/suspend the account whenever they felt the need. I will be visiting them after printing out the new guidelines. Will let you know. Just an FYI, the numbers they used were not correct for reason for closing/suspending.. example I owe 35,000 yes 35K on my house but they said I owed 55K.. not sure where they got their numbers ~ Thank you
By Wil Keheley @ 08/27/08 03:07:51 PMreport abuse
Excellent news
It's news like this that I really appreciate Clark for. I subscribe to several other blogs and podcasts, but the news here is always fresh and new. I actually agree with the Fed's on this one, good show!
By Utah Tim @ 08/27/08 02:32:11 PMreport abuse
What part of 'bankrupt' don't you understand?
I have to laugh at the whole situation. The banks are literally bankrupt under the accounting definition, but Uncle Sam says they have to lend money anyway!

Let's lend money we don't have to people who probably won't pay it bak. Yessir, that's a recipe for success!
By Greg @ 08/27/08 01:36:24 PMreport abuse

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Aug 27, 2008 -- Get your HELOC turned back on

What others are saying