Realtors beware, your clients down payment could be disappearing

Many people use their home equity lines as down payments. If you are a Realtor you need to be aware that banks are pulling back and canceling many of them. I have had mine canceled in recent days. I would advise you to tell your client to pull the money out now and not when they need it. Because when they need it, it may not be there.

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Why it's bad news that millions of home equity lines are bing cancelled

From the previous post I reported on my home equity line of credit or heloc was cancelled by National City. This is bad news for the economy because millions of home owners were tapping there home equity lines to make purchases, buy cars, make home improvements or just go on vacation. With these credit lines no longer available, this only means less money being put into consumer spending and the economy. My guess would be that it will take a few years to get the economy turned around. Hopefully lenders will loosen their lending guidelines which will make it easier for people to get money. This would help.

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How to Lower your second mortgage at National City

I just spoke with a client of mine who I did a second mortgage for at National City Home Equity. He told me that he paid them $50 to recast his mortgage again after he had already set it. National City heloc second mortgages came with a feature that allowed you to lock it in. He had a home equity line of credit which is typically variable, however they allow you to fix it in on an interest only payment for 7 years. He had locked it in a few years ago and had made it a fixed. He just called them and they are allowing him to drop it again. I had never heard of that. He was able to drop his rate over 3%.

If you have a National City loan and have already fixed it in, you may want to call them again to see about a recasting fee and get a lower rate.

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What's the deal, Wamu cut my credit line

The home equity fairies were at it again. Sadly they cut into my own heloc. I had a home equity line of credit with an original line of $27,500. Wamu just sent me a letter stating they are cutting my line to $8300. Second mortgage companies are positioning themselves against potential future loses. If you have a credit line now, don't count on it being there in the future. There are no guarantees that you will have it in the future. They can do this, it is written into their mortgage notes.

Don't be surprised if you find a letter in your mailbox stating that your line has been cut down. I have a rental property with a line from National City on it. I guess I will be getting a letter from them soon as well.

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My Home Equity Line from Chase was just closed

I just wanted to report on a client of mine that just had their home equity line of credit closed. If you took out a high LTV or loan to value credit line or second mortgage you may be getting a letter shortly telling you that your line has been frozen or taken away. Banks that issued second mortgages are starting to get gun shy about leaving their credit lines open with declining property values and rising foreclosures. Do not assume that your line will always be there. If you are tapping into your equity every month to survive you may want to look for alternatives to get the cash that you need.

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Citi Mortgage anounces mortgage cutbacks on 2nd mortgages

Citi Mortgage, a division of Citibank, is cutting their loan to value limits on second mortgages to 85% ltv in areas of the country that are deemed to have declining markets. This is just another symptom of the the mortgage meltdown this country is experiencing. Chase has cut their lending limits to 75% ltv on second mortgages. Six months ago both of these lenders would lend up to 100% of the value of your home.

Lenders are cautious now. You need to do your homework now if you are trying to get mortgage financing on a home. Just because you want to do something, does not mean that the banks will be willing to work with you.

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