I am still ranting and raving over Countrywide closing my HELOC. It was arbitrary, widespread, and without justification. There is a rash of consumer complaints and the Office of Thrift Supervision (OTS) issued a six-page letter of guidance to the lending institutions (thrifts), spelling out their obligations on home equity lines of credit. OTS is a federal government entity.
There are 830 +/- thrifts (lenders) freezing the credit promised to borrowers and altering rules for accounts that weren't suppose to change. OTS has notified the thrifts that their examiners are going to be focusing on HELOC's and companies that froze them.
OTS guidance says that they can freeze promised credit under approved circumstances like a substantial loss in value of the underlying property. And, any reduction of a borrower's credit limit below the outstanding balance cannot require the borrower to make a higher payment. AND, they cannot freeze home equity lines for broad geographic areas!
The owner of your HELOC must weigh each loan individually to determine when there has been a "Significant decline" in the value of the collateral, the home. This decline is viewed as a 50% drop in the home price from the time the home equity line of credit was offered. AND, they cannot charge a fee for restoring the credit line.
So, in lieu of that, I feel as though we can make a difference and that those whose line of credit was unscrupulously frozen should file a complaint! I am!!!! I did a major remodel and paid cash for it instead of using my HELOC - any decline in property values in my area (which is VERY minimal) was more than made up for by my remodel investment. I was told to get a new appraisal and they would reconsider. I asked why I should have to pay for the new appraisal as I paid for one when I originally secured the loan. I refused to do it, and the freeze is still on my account...which has great DTI, LTV, and credit! But, I am wound up again and am filing a complaint with OTS because if they do it to me, they are doing it to all my clients. We should not be lumped together for freezing, just as we are not lumped together for qualifying! I hope everyone who has had their HELOC frozen files a complaint!!!!
To read the Press Releases
OTS 08 038 - OTS Issues Guidance on Home Equity Lines of Credit
FOR RELEASE: CONTACT: William Ruberry
Tuesday, Aug. 26, 2008 (202) 906-6677
Go to:
http://www.ots.treas.gov/?p=PressReleases&ContentRecord_id=ff1e5c71-1e0b-8562-eb17-322afdc45a53
To file a complaint:
Contact the OTS Consumer Response Center to reach a dedicated consumer affairs specialist.
Phone: 1 (800) 842-6929
Monday through Friday 8:00 a.m. - 5:30 p.m., Eastern Standard Time
Fax: (202) 906-7342
E-mail: consumer.complaint@ots.treas.gov
Stand up and be heard (better write put it in writing)!
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