Countrywide suspending equity lines of credit
‘œIt is only the poor who pay cash, and that not from virtue, but because they are refused credit.’ ‘“ Anatole France
I’ve always kept a home equity line of credit (HELOC) on our house in Newport. Jeanine and I never access it. It’s there for catastrophic reasons (the HELOC would buy us more time to weather a major financial emergency). Over thirty percent of our home’s value is buffered in equity and the HELOC gives us access to about half of this value if we ever need it. Our first mortgage on the property is a 7 year fixed interest only. I’ve never stayed in a house longer than 3 years so despite what people think of ARM products, they’re a great alternative if used responsibly. It drives down our monthly payment and the mortgage interest deduction at tax time is significant.
I’ve used this same strategy on my rental properties, keeping equity lines open but paid off. However, with these properties the first mortgages are of the 30 year fixed variety. I’m paying down principal every month. I used one equity line this summer to do some improvements and then to carry the mortgage while I was trying to get it re-rented. It is now paid off again and all three properties are currently leased.
I give this background to demonstrate that I’ve been a prudent borrower and resourceful real estate investor. So it came as a surprise this week when I got a letter from Countrywide about the HELOC on one of my properties in Phoenix indicating this:
Important message about your loan: At Countrywide Home Loans we are committed to helping customers sustain homeownership. As part of the commitment, and in keeping with its sound risk-management and responsible lending practices, Countrywide Home Loan is reviewing and analyzing home equity lines of credit in its servicing portfolio.
As you know, home values in many areas of the country have declined. We believe that the decline in the value of your property, from its original appraised value at the time your loan was made is significant. In accordance with the terms of your Home Equity Credit Line Agreement and Disclosure Statement (Agreement), we have elected to suspend further draws against your account as of the Effective Date above.
What this means for you: You will no longer be able to draw on the line. Blah, blah, blah’¦
You get the gist. I was annoyed. I would never have parked my cash there (meaning pay off this particular equity line) had I known I would not have access to the money. I had no idea that they could do this. Did you?
Apparently, I’m not alone. On Friday, the Los Angeles Times reported that Countrywide notified many homeowners they’ve lost their right to borrow against their credit lines:
Tens of thousands of homeowners with home equity lines of credit are getting a rude surprise: They’ve been told by their lender that they can no longer take money out on their credit lines because sinking home prices have left them with little or no equity.
Among the lenders taking such action is Countrywide Financial Corp., which sent 122,000 letters to customers last week telling them they could no longer borrow against their credit lines. In some cases, according to the company, the borrowers are now ‘œupside down’ — the total debt on the home exceeds the market value of the property.
Calabasas-based Countrywide, the nation’s largest mortgage lender, says it uses computer modeling that factors in changes in home prices to determine which customers will have their money tap shut off. The cutoffs are coming as a shock to some.
Hello!? I immediately called Countrywide (the lender that doesn’t like lesbians) and when I argued that I’ve been a good customer for years, the customer service representative politely indicated the change was made simply because my home’s value had declined.
That part is true’¦ this particular house has declined in value by about 20 percent. The other two rental properties were purchased long before the bump in market appreciation so I have considerable equity in those properties. But even with the decline in value with this one, my intent and strategy was to buy and hold so I didn’t think fluctuation in market value mattered. Until now.
Of course, they have the right to do this and it’s spelled out in the fine print. They outlined it for my convenience via the Q&A in the notification letter:
Q: How is Countrywide Home Loans permitted to temporarily suspend my ability to draw on my line of credit? Where in my contract does it state that Countrywide Home Loans has the right to refuse to make any additional loans to me?
A: In your contract, which has the heading Home Equity Credit Line Agreement and Disclosure Statement (‘œAgreement’) you will find that you have agreed that we may take this action. Please look for this in your Agreement under the paragraph heading that reads: ‘œYour Rights to Temporarily Suspend My Loans or Reduce My Credit Limit’.
If I had known they had the right to suspend my line of credit then I would have maxed out the line and put the cash in savings until the market came back. It’s too late now. Here’s the other thing’¦ had I known this, then I would have never paid for the HELOC in the first place, but would have just put down an additional 10% on my first mortgage. The HELOC costs money ‘“ off hand I don’t know the exact amount, but fair to assume the fee was at least a couple thousand dollars. In my mind, this was money well spent’¦ I’m obviously not alone. The article in the Los Angeles Times continues:
‘œWe didn’t deserve this,’ Thaleia Georgiades, a real estate agent in El Dorado, Calif., said Thursday, two days after she and her husband, a builder, learned that their Countrywide credit line had been frozen.
‘œWhen you are self-employed, that’s the money you count on to bridge the gap during tough times. And this is a particularly tough time in both the building and housing industries,’ Georgiades said.
I understand and can appreciate that this is an especially risky time for lenders. But I’m a good customer and feel I’m being penalized because other homeowners are at a higher risk for foreclosure. I’m not the typical borrower using my home as an ATM ‘“ colorfully described by this commenter on the Los Angeles Times blog:
Sorry, cannot complete the transaction at this time due to insufficient funds. The ATM then sucks up your card and advises you to speak to an agent.
Instead of using my HELOC as an ATM, I was using it as a savings account. Unfortunately, there’s nothing I can do about it now. Has this happened to anyone else?
I saw a blog last week that someone got a letter and they were in the process of calling to find out more but had not at that point but was putting out a did anyone else get a letter.
Sorry to see this happening. I know they do this when you late on a payment that they can change all your credit card accounts to a higher interest rates. I am so mad about this myself I am in process of paying off all my cards and have no plans to ever use them again. The only credit I would consider is a home loan and thanks for the heads up I’ll watch for these types of clauses.
Wow! I am so glad that I took my HELOC from a lender other than Countrywide. They bought the mortgage on my house and constantly deluged me with requests to open a HELOC on my house. I just sent in a large payment on my HELOC – I expect to have it completely paid off by the end of March. I had thought that this meant I had good reserves, but now I have to worry that when I need the money I won’t be able to draw on it. Thanks for the heads up.
Yes, I received this letter too! And I am livid!! I bought my home at a steal price! Redid the kitchen and bathroom and when I refied out of an adj rate three years ago realized a 33% growth in equity. At that time I opened a HELOC with good old Countrywide. I do not do not do not use my line of credit as an ATM. I pay with cash except for using the HELOC for home improvement, emergency situation (not had any), and most recently to complete an international adoption. So if this letter had come a week later I would have been okay. Now to complete the adoption I have to juggle like a mad fiend. I have never been late on any payments, have an investment property that is rented and also with Countrywide (they bought the loan not my choice) and have at least $120,000 in equity between the two homes (even in this crummy market it is still about $100,000. They suspended my HELOC on my primary residence (the only HELOC I have) of $24,000 (my once available line) even though I only owe $98,000 on the home and the recent appraisal was for $155,000. Even if you want to say that the house in only worth $140,000 that would be a LTV ratio of about 56%. I will never knowingly do business with Countrywide again. I have almost $20,000 in available credit on credit cards and owe right now about $1200 which will be paid off before interest accrues. And after that I will put them all away in a folder and pay CASH!!!! So much for being responsible and living way way way below your means – you get to be penalized for those people that have not lived their financial life this way. Hey here’s a thought? Instead of lumping everyone together how about doing a reevaluation of your customer’s information individually. You want to know if a house has declined in value – do an appraisal. You want to know if a customer is overextended or upside down – look at the individual facts. I just wish there was a way to never do business with them again but they can buy a loan without my approval and put me in a bad situation without my consent because of their shoddy business practices of loaning money to people that think in terms of spend spend spend.
That must be really frustrating. With Countrywide’s terrible track record in the last year, this doesn’t surprise me much. I expect they can’t afford to be bogged down by any more bad borrowers, so they’re limiting the good borrowers too…just to be “safe.” Not good for business.
Daytona Beach: With regards to the credit cards, that’s called Universal Default and yes, this seems similar in that Countrywide has the right to do this even though most people have no idea until it’s too late.
Larry: You’re welcome. I remember our conversation about why I liked my HELOC as my backup plan and safety net. Some safety net, huh?
Amy: I’m sorry to hear that it happened to you too. It truly seems unfair… however, since your house hasn’t declined much in value you should send them the recent appraisal and they will likely make an exception based on this document. They said if I could prove the house hadn’t decreased then they would do this for me. My rental house has declined in value (I know this because of what other homes in the neighborhood are now selling for) so it doesn’t make any sense for me to try and fight it.
Mrs. Micah: Yes, that’s exactly what they’re doing. But safe is good for business these days when the risk is high with many borrowers.
Countrywide did the same thing to me. I am a lawyer in Florida and have read my agreement with Countrywide. I do not believe they can do what they are doing now. According to my contract, they must have evidence that my Real Property “declined significantly below its appraised value.” They are not allowed to simply freeze the lines because of “general” market conditions. Upon discussion with Countrywide representatives, it is clear to me that their action are arbitrary. I am either going to sue them individually or as a class action. Take a look at your contracts. They are probably all the same.
I have a HELOC with Countrywide but i’m in a bizarre situation…I put 0 down, and did interest-only (yes, one of “those” people!)…I went to refinance a year ago to lock in a fixed rate and they said i HAD to pay down my HELOC to do it.
So i’ve been busting my ass off trying to pay down my HELOC…what’s killing me is that we put 0 down because we couldn’t save up as fast the homes were going up…and now i’m trying to pay DOWN but my house is declining faster than i can do that…argh!
I’m wondering if it’s even worth it to bust my ass to pay it down at all. My adjustable rate expires at the very end of 2009…do I just ride this out, or should I keep paying down my HELOC? I thought at least if I paid it down, and I needed it, at least I could still use the little credit cards they sent out.
Oh in case anyone cares…my itty bitty little overpriced townhouse loan is $395K in the 5 year adjustable (expires end of 2009, HELOC is 99K…my goal was to pay down $30K by the end of 2009….
Juan: Hmmm… class action… where do we sign up?!
Random Thoughts: Thanks for sharing your personal story. The declining values are depressing, but stay the course and get it paid off if that’s the only way they’ll let you refinance.
Juan C. Montes: “I am a lawyer in Florida and have read my agreement with Countrywide. I do not believe they can do what they are doing now. According to my contract, they must have evidence that my Real Property “declined significantly below its appraised value.†They are not allowed to simply freeze the lines because of “general†market conditions. Upon discussion with Countrywide representatives, it is clear to me that their action are arbitrary. I am either going to sue them individually or as a class action.”
Please do open a class action lawsuit against Countrywide!
They did the same thing to me! I know for a fact that market values have not declined in my area. On the contrary, our Chicago suburb has experienced a five year annual appreciation of 8%, with a 4% gain over the past year because the market cooled slightly.
After badgering Countrywide for proof that my property has declined in value, they won’t send me any documentation of such but they did verbally claim that my property’s value declined 33% over the past 3 1/2 years.
There’s no way that’s possible.
I, too, believe that legally they cannot arbitrarily declare that a property’s value has declined and freeze a HELOC without being able to provide documentation of the decline in value.
Where are the federal regulators? Add this latest illegal practice to the laundry list of Countrywide’s illegal practice case file.
Part of this week’s Carnival of the Insanities.
My attorney advised me to join a class action suit against Countrywide and Emc and Am South Bank. I’ve been on the net for hours and cannot locate the firms sueing these lending institutions for predatory marketing and deceptive practices, resulting in the collaspe of the market etc. Can you direct me to such a firm or firms?
I can’t speak to the fine print and what their burden of proof is or to the amount of research they’ve done, but I think that it’s completely fair for them to do something like this — to close HELOCs when your equity declines.
In fact, I’d think the company was fiscally irresponsible if they weren’t able to do it.
I really don’t think it’s fair to take issue with the principle of them doing this. If you want to take issue with their calculations / burden of proof, then that’s another thing.
I’m sure you are a responsible lender with your mortgages. And I’m sure you’re a responsible lender with your credit cards (if you have them). But no matter how responsible you are with your credit cards, you won’t get 6% interest. I’d imagine a lot of that is because your credit card debt is unsecured whilst your mortgage debt is secured. Now, according to their calculations (very potentially faulty), you’re essentially asking them to give you unsecured debt at incredibly low, secured rates.
James
USAA is doing the same thing. I live in MN, and just had my line frozen. Never been late on ANYTHING. Thought I had a cushion if I needed it. They froze my line with 2 outstanding checks, and said they will pay one check but not the other one. I should point out I only had about $13k on the line with a $55k limit. And even with their new value assessment, my CLVT is 90%!! So, I’m not even upside down!
The problem is that they’re freezing HELOCs on properties that have NOT declined in value.
I spoke to successively higher levels of Countrywide employees today to request a copy of their current valuation of my property on which they’re basing their claim of a ‘significant decline in value’, and finally ended up with a manager who admitted that Countrywide didn’t even have a valuation on my property that shows a decline in value. This Countrywide manager said that CW was freezing HELOCs because of the decline in the real estate market in general.
Obviously, it would be fiscally responsible if they froze upside down HELOCs (debt exceeds equity). But, they’re freezing HELOCs indiscriminately because of a general market decline.
This is a violation of the HELOC agreement which states that they may restrict or suspend the HELOC if there is a significant decline in the value of the Real Property securing the HELOC.
How can they freeze my HELOC if they can’t establish that the value of my property has declined? (Note: They can’t establish this; property values still continue to appreciate in our area – this is not CA or FL.)
I could easily dispute this with a CMA or another appraisal, and win reinstatement of my HELOC. But, the bigger problem as I see it is that CW (and any other lender for that matter) believes they can freeze equity lines at will with no supporting documentation of a property’s decline in value.
What they’re doing with these general market decline HELOC freezes is similar to lenders deciding to grant loans based on an area’s average home value instead of the value of a specific property – or based on a population’s average income level instead of the specific borrowers documented income – or using a population’s average credit score to determine a specific individual’s credit worthiness.
CW has breached the agreement.
If your HELOC has been frozen without substantiation, too, file complaints with your state’s Attorney General’s office, your state’s Banking Authorities, and the FTC.
FTC Complaint Form:
https://rn.ftc.gov/pls/dod/wsolcq$.startup?Z_ORG_CODE=PU01
I certainly would have parked a lump sum of cash from a partnership distribution in my savings account rather than pay down my equity line if I thought something like this could happen. Silly me, thought that paying a higher interest rate on the outstanding balance than I could get in a completely safe vehicle was not financially savy. So, Countrywide got paid to open the account, paid religiously on my mortgage and the equity line and even got my money before I would have been contractually required to pay it. I, on the other hand, have sacrificed the opportunity to choose how to spend my money, given up a financial cushion, and will now need to completely rethink my financial planning. I feel like a chump!
BTW, a friend who is a successful mortgage broker said that she has never seen anything like this in the 30 years she has been in the business. That includes the years following the SoCal aerospace collapse when people were massively upside-down & were leaving the keys on the kitchen counters of $500K+ homes.
The rep from Countrywide wasn’t even polite when called. What a great company to avoid doing business with! I will certainly make sure to never use them again.
Sharon, Peter and others: You may contact Juan C. Montes at jcm@lidskylaw.com or through his firm’s website at http://www.lidskylaw.com for further information on the possibility of joining a class action lawsuit.
James: You make a valid point with the credit card interest rate comparison, but read Sharon’s second comment and you’ll see they are doing this because of general market decline. In order to get the suspension reversed, it puts the burden of proof on the borrower and not the lender.
Sharon: Thanks for the additional details and link.
Kate: “Countrywide got paid to open the account, paid religiously on my mortgage and the equity line and even got my money before I would have been contractually required to pay it. I, on the other hand, have sacrificed the opportunity to choose how to spend my money, given up a financial cushion, and will now need to completely rethink my financial planning. I feel like a chump!” Well-said. I feel exactly the same way!
I’m really curious about this. I can’t tell for sure, but it looks like everyone posting about getting cut off on their HELOC has an ARM loan of one kind or another. Has anyone with a plain old 30 year fixed been cut off on a HELOC? I’m wondering if CW is just cutting off all of the HELOCs that are connected to ARM loans.
I have a different probem and I too have been scouring the web for information.
Countrywide, after having two prior loans with, decided to impose Hurrican and Hail insurnce on my house when it was never needed.
They say I owe them $3200 to my escrow plus come the April, my payments will go up by $600 making the payment $1650.00. I’m asking them, nicely, to reverse thier mistake. I haven’t received a response other than a letter stating the facts after I had found those facts on my own.
I will be refinancing the house to get out of their control but, unfortunately, I will probably have to finance the $3200 to switch the escrow title.
Can someone out there give me advise on what to do short of getting a private lawyer? Are there any class actions simular to this out yonder??
Thanks,
wh
Hi everybody,
I got my letter some days ago. I have zero balance and I wouldn’t need this HELOC possible for some years, but I lost my back up security, and also my settlement fee I payed at the closing table. That is the most painful for me (more than $10,000).
Ready for a class action against Countrywide, I’ve already sent an email to Juan C. Montes, a lawyer, who is in the same boat.
I have a 30 year fixed loan, also with Countrywide, and my HELOC was suspended. Never been late on a payment. Yes, values in my area have decreased but I have over 250k cash in my house. i put 40 percent down so even if they say my house vaule has decreased 60k which I think is high, I still have plenty of equity in my house.
They don’t like straight white men either. I had a HELOC from B of A and just got their cut off letter today. I think this is going to be an equal opportunity screwing.
I have a Countrywide Heloc for the last 4 years that I took cash advances where doing small remodeling to our home. Since I have a lot of equity on our home and planning to add 2 bedrooms and 1 bathroom to our house I took they offer to increase my credit line about a year ago. Two months ago we took a cash advance and started the addition, at this time the builder is setting the drywall. But now Countrywide froze my cash advances, I still have to pay the builder and trying to contact them and explain this to them to no avail. Their customer service keep telling the advances are frozen but they are ready to offer me another credit line so I can finish our addition.
I just received a letter today from Chase. Im in PA and just read an article in the local magazine regarding home values. According to the article my value has gone up by 8%, but chase says that its gone down by 12%. So, now I suppose that I have to go and get a professional apprasal for x hundred dollars just to prove that their bogus appraisal that they did on the computer by looking at bogus values of incomperable houses.
This is ridiculous. Like the above posters said – I would not have paid down my HELOC had I known that this could happen.
Just when I was planning a major construction project too…
I got my letter from Citibank. I didn’t have much equity in my home, and was putting extra money toward my HELOC, thinking that it was smart to pay this off first because the interest rate was higher than that of my first mortgage. Well, they have reduced my line of credit to what I currently owe on it – thus erasing all of the money I had put into those extra payments. Unfortunately, I had no idea they could do this. If I would have known, I certainly would have put any extra payments toward my first mortgage or other lower-interest debts – somewhere where my money would have helped put a dent in my debt and wouldn’t have disappeared in a puff of smoke. I know there are people far worse off and in serious danger of losing their homes right now, but still – how depressing. I am certainly only paying the minimum on my HELOC for the foreseeable future. Lesson learned – the hard way.
My partner (business type, we happen to be straight :)) just got the letter today. It is particularly hilarious as the million dollar home on which the HELOC was taken, while down in value, is still owned by him with a 65% LTV – even with the HELOC – and he happens to make over a million dollars per year… Completely arbitrary on the part of CW, and highly tortious, as the contract (we checked) states that the line may be suspended based upon the specific properies’ (re)valuation. They are in breach of contract, and will be sued – successfully.
Citibank decreased my equity line too. What is outrageous is that
1- they used some bogus computer program to calculate the decrease
2- this bogus program established a decrease WAY higher than currently available data for my zipcode or city (double the percentage)
3- They do not disclose the criteria they used (new loan-to-value for example)
4- I have to pay for an appraisal to appeal and prove them wrong
5- They are not willing to disclose the criteria they would use to evaluate the appeal. That is, even if my appraisal comes higher, they might do nothing about it
This is not adjusting to the market, this is betraying the costumer! BEWARE OF CITIBANK
We got cut off today… FICO of 800… Paid 800k for a house in San Diego, Paid 500k down payment. Had a 300k line of credit… never used it. Glad to have it as security. Even if our home has devalues 50% which it has not… there is still equity. Responsible borrowers are being discriminated against… where the hell are the true moral hazard advocates. Anyone interested in pursuing a class action suit PLEASE RESPOND. After the suit is filed perhaps we can set up a third party escrow account and make our payments to them, NOT Countrywide. That should settle the issue!
ALMOST FORGOT… Not to mention the cost of a Heloc… Don’t forget… COUNTRYWIDE HAS A LIEN ON YOUR HOUSE IN THE AMOUNT OF THE LINE… THEY MUST BE HELD TO RELEASE THE LIEN ON YOUR HOUSE IF THE LINE IS PAID UP… IF NOT THE HOLD A LIEN ON THE HOME FOR NO REASON… LETS FILE A CLASS A CASE… WE CAN DO IT… .HEY THEY ARE THE IRRESPONSIBLE JERKS NOT US.
In my view they do not have the right to suspend based on a general decline in market value. I don’t know what your contracts say, but mine triggers the right only if: “the value of the Real Property declines significantly below its appraised value.”
So, the burden is on them to show the decline if they use that excuse. I don’t believe they can show that just by showing a general decline. They have to show the property subject to the mortgage declined significantly.
My guess is that they have not shown an actual decline on any of their subject properties. The value of my property has actually increased based on recent comparable sales in my zip code.
So, I would be interested in hearing from others who are in the same boat. My email is jcalvert@att.net
John Calvert
As a follow-up. To my last comment. I believe they need a specific appraisal of your propety to show the decline. How else are they going to establish it?
John Calvert
jcalvert@att.net
They told us that they use computer generated models. Whatever that is? I agree with you, a fair evaluation would be on a house to house basis.
ETrade just did it to me. I am trying to get my service fee back, but am not getting very far.
We just had this happen with citibank. They said it is a blanket property DEVALUATION for the state of California. how could this possibly be legal.
Citbank just sent me a letter today, 4/18/08, decreasing my HELOC 88%. Besides the fact that the value of my home has NOT decreased, the most annoying part of the letter I received was the fact that the ” effective date” was 4/14/08, one day BEFORE the date the letter was written/mailed. Also, the ” appeals” process is an appraisal done through a company of ther choosing: How do I know that this company isn’t biased towards Citibank?
All of you guys are nuts.
A HELOC with an available line is NOT your money, it’s theirs.
And if you guys have been following the news lately, the reason most banks have been closing down open HELOC lines is because they have run out of money.
If they have no money to lend, then how in the world can they lend it to you?
You are wasting your time talking about class action suits and suing them.
The banks are bankrupt. They have no money left. It’s all gone. Ergo, they can’t lend you any.
Wake up and smell the depression, it’s almost here.
Yep, I got the same form letter as everyone else from Countrywide. I have a zero balance on my duplex HELOC & was never late, using it only for a few months at a time then paying it off in full. I’ve had it about 1 year. Countrywide said that I MIGHT be considered for reinstatement of my HELOC if I could come up with either
1) 4 comps sold within 90 days and within 1 mile of my property
2) a brokers price opinion
3) a formal appraisal
These documents had to reflect a minimum of a 5% increase and that was not even a guarantee! Then I asked if their LTV had changed. They told me that they WILL NOT reopen a HELOC on an investment property PERIOD. Regardless of any appraisal, comp or whatever. And no, they will not waive the $350 cancellation fee because they MIGHT reopen it someday. Hijos de putas!
I pinched and saved $300k over 35 years. Made a decision to take the cash out of savings and pay off my $311k Countrywide HELOC since the interest rate was pushing 8.5 % knowing I could draw on the equity line in case of emergency.
I have a high fica score (over 840) and never missed a payment or bounced a check in 35 years. Three weeks later CountryWide suspended my HELOC. Now I sit here bare naked – “no cash that is” with no cushion for emergencies. Since I have since moved and rented out the property it now is classified as an investment property with different guidlines. Now, they say the investment property equity line maximum is 65% of the property value. They say (untrue) that the total property value has decreased to 65% of what it was 1 year ago.
Come on? Therefore, no equity line available.
Cheap shot to a guy with excellent credit. They simply made a good guy mad. I get even by not doing business with people who treat me wrong. Yes, I would join a class action. And, definitely would not ever do business with them again.
Wishing I could take those three weeks back!
Dale
HELOC Freeze Investigation
We are investigating several home equity line of credit (HELOC) lenders for their practice of freezing HELOCs based on claims of reduction in property values without obtaining actual appraisals to substantiate the decline in value. This practice may violate state and Federal law as well as the terms of HELOC policies.
If you would like more information regarding our investigation or have any information that you would like to share please contact Noah Sacks at noah@moginlaw.com or call toll free 888-557-2545.
The Mogin Law Firm, P.C. is a highly experienced Southern California class action firm. We specialize in representing a select clientele in antitrust, unfair competition, consumer protection, false advertising, investment, complex litigation and class action cases. Other law firms frequently seek our expertise.
This post may be considered legal advertising. No legal advice is offered and no attorney-client relationship or duties are created or intended. Attorneys are licensed in California.
It could be worse… I refinanced my HELOC with CW in May of 2006. They did a “computer” appraisal for a value of $486,000. Took out the money to use as planned, got the letter suspending my HELOC… ha ha already have the money…needed to sell, find out the house declined in value some, but was inflated by the computer appraisal over $60,000 from what it should have been in May 2006. When I called to complain about their fraudulent appraisal, they offered a refinance, but then declined when they assessed my value ON THE PHONE by looking at http://www.zillow.com! I now have a house worth $100,000 less than the loan. Could be worse, but I wouldn’t waste time trying to argue with them about suspending equity lines… they will be able to establish the loss in value easily with all the short sales and foreclosures currently available as comps.
I am an attorney specializing in class action litigation. We are investigating potential claims against banks for unreasonably reducing or freezing HELOCs based on a purported “substantial decrease” in the value of your property as determined by some “computer model” and then requiring you to pay hundreds of dollars to obtain an appraisal to prove this computer wrong. Please contact me if you would like to discuss this issue further.
Brian Rishwain
Rishwain & Associates, Inc.
439 N. Canon Drive #200
Beverly Hills, CA 90210
brishwain@jrllp.com
HELP!!! I have a client midway through a major remodel and this has happend to her. Her house is completely gutted of a kitchen and I have a warehouse full of cabinets that I have paid for half of $12,000!!! We are supposed to install cabinets this week but I cant continue this project without payment. Can they do this? It seems to me that without a kitchen they would lose alot of value on the house.
I just received my letter yesterday informing me that my account has been frozen related to decline in home equity. Funny thing is, we don’t owe a cent on your home. Values in area is still way above amount we could pull from home equity line of credit. Called Customer Service and would have to prove with 3 different valuations recently sold home prices in area before they will reconsider lifting suspension on my HELOC account. Yet they will not close account and reconvey deed back to us, will have to pay termination fees. Hell we paid good money upfront for this loan but they will not refund that money either. Why, should people with good credit and standing with hell alot of home equtiy built up should pay for other stupid people mistakes that took out way more loans than they could pay for in first place. I’m in for a lawsuit……Where do I sign…..
One more note, my contract states they can terminate HELOC loan if engage in fraud, do not meet repayment terms or action or inaction adversely affects the colleteral or rights in colleteral. Next it states that they can refuse to make additional extensions of credit or reduce credit limits or both if property declines significantly below its appraised value for purposes of the line. It also states that the initial agreement permits us to make changes to the terms of the agreement at specified times or upon occurance of the specified events. Heck I was not asking for additional extension of credit and they sure didn’t reduce my the amount I could borrow, but instead suspended the acount all together. The homes are selling in my immediate area for well above the amount I could borrow on my HELOC account. So what gives them the right to automatic cancel my loan…