Banks continue trying to dodge bullets

It’s apparent that our banks are not made of steel like superman.

The latest bullet is the HELOC. All of the major banks are reporting the highest delinquencies in more than a decade.

The biggest concern is the plunging home values of homes making a huge amount of the loans basically unsecured. Americans now have over $1 TRILLION dollars of HELOC debt on the books.

Many of the largest banks have made some move to limit the availability of credit lines by closing them. However, National City has gone one step further by actually offering bank customers cash to close the lines.

The Feds have ramped up the capital reserves required for the banks and it’s hurting badly. Not only are they required to stash cash for the losses but they must set aside reserves for the available untapped lines on the books as well.

Many folks are not aware that a HELOC is an asset and was often sold by banks in pools as bonds.

Some advice for consumers and real estate investors is access the line now if you have the need but be sure your house is in order to avoid any personal danger. Here in Chattanooga, Tennessee and North Georgia, we haven't heard much discussion regarding the large national bank actions yet but that will surely change soon as they have issued closing letters nation wide.

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