Bay Area REBlog

 Needless to say, I was not happy this week when I received the dreaded letter from my lender informing me my equityline of credit limit had been frozen at the amount I had already used. Although I was aware of others who have had the same experience within the last few months, I thought I was safe and had not withdrawn my maximum limit-thoughtless of me.

It seems the federal Office of Thrift Supervision is looking into the consumer complaints regarding cancellations and reductions of equity line of credit loans. It seems only in certain circumstances (such as fraud) can lenders terminate or accelerate payments on outstanding balances of a HELOC. Also lenders cannot reduce or suspend a line of credit unless the value of the property has significantly declined in value, or the borrower has defaulted on the loan, or if the lender believes the borrower will not be able to make the payments as agreed.

In any case, with a bit a research I have found that there is recourse. First of all, talk to the lender. In my case, I was told that my area is in a declining market and the home value no longer justifies the loan amount. I plan or getting some comparable sales ready to justify the value of my home and then call the lender after the holiday.

If you feel the lender may be illegally reducing or canceling your HELOC (home-equity line of credit) you can file a complaint.  First talk with the lender to resolve the problem. Next submit a complaint to the government agency which oversees the lender. If it is a savings and loan  notify The Office of Thrift Supervision (800-842-6929 or www.ots.treas.gov ) For complaints about banks notify The Office of the Comptroller of the Currency (800-613-6743 or www.occ.treas.gov )

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