I’m hoping to get some thoughts on the likelihood of getting some equity lines that we have on investment condos called in by the lender. Here are some details:
The equity lines (3 different ones) were taken out with Wachovia between two and four years ago.
The properties are individual condo units located in complexes where most of the units are also owned by other investors.
All three equity lines are the only debt borrowed against those properties.
The properties and the lines are both in my name and my brother-in-law’s name.
The LTV at the time that we secured the lines was 80-90% LTV.
The interest rates on these lines are between prime + 0% and prime + .789%.
We do actively use the lines and currently have borrowed approximately 80% of lines’ limits.
We’ve never been late on payments.
We haven’t heard anything to make us think they’ll get called in/closed, but I was curious what others thought about this likelihood.
Considering that the loans are a variable rate, I would doubt that they would be “called in”. Your credit line however, MIGHT be cut if the bank “adjusted” the valuation of the underlying col…
Considering that the credit card issuers and banks were soundly thrashed by congress for slashing and closing credit card lines and playing games with checking accounts already, I dont thing the banks would do this to HELOC’S. Considering that “calling” a line could mean a foreclosure if the buyer couldn’t pay up immediately, I don’t think they are about to attempt this unilaterally.
I would be very careful not to give them a reason to “adjust” this line for any reason, especially if the property value has in fact dropped…
I received a reply from the same post on another board. I pasted it below:
"Wachovia just cut my equity line on my personal residence from 300k to 189k, based on their perception of falling values. It is in first position, and we have excellent income and credit. All they care about is the value of the collateral. Their bank valuation said that value went from 384k to 250k. Reality is probably a value of 325k. The only way to dispute it is for me to pay for a new appraisal which will still reduce the line amount since they now want a lower LTV also.
The funny part is, I have 298k drawn on the line. My Wachovia rep just told me to keep it out. As long as I continue to make payments, they won’t force me to pay it down.
I kept hearing that this would happen, and it finally did, so be aware!"
I know other people who’ve had their lines on the primary residences also substantially cut as well.
I’m probably going to empty out the rest of the lines just to ensure that the $$ is available to me - even that means paying some extra interest to ensure that’s available. Sucks to have to make that choice, but I’d be willing to bet that we’ll be affected at some point.
At least the banks aren’t doing what the credit card companies tried, which was drop the limits… and then put the buyers in immediate “over limit” situation and run up fees.
Cutting the line so you couldn’t tap additional credit on them, I see, but I would fight the appraisal and consider SUING the appraiser and/or file complaints on the appraiser the bank used if you got a 325k appraisal on the unit. Having the HELOC essentially converted into a mortgage is not what you want to see on this one, and it might very well scare the hell out the bank if you DID do something.
Depending on the market, slashing a valuation from 384 to 250 sounds “excessive” and the cry of the bank “paying off” an appraiser to deliberatly appraise the property excessively low could be considered acting in bad faith. It sounds like this appraiser did EXACTLY that in this specific case, and if you catch a bank in the act of doing that, it probably would be reason to provoke what banks truly fear - a full audit by the likes of the FDIC into their operations.
Cut the credit line but not call it? ok… I understand that part, but I would make the appraiser that did that - and/or the bank involved feel just a little bit scared…
I think it may depend on where you live. I have had two lines of credit closed this year by the banks. Totaling $75,000
One by Bank of America and one by Swift Financial Services. I owed zero on these lines of credit.
No notice no warning no kidding.
Just a form letter saying SORRY they were pulling the plug.
I live and invest in Las Vegas Nevada so that my have had somthing to do with the closing. Just because Las Vegas had one of if not the highest foreclosure and mortgage default rates in the country.
The loss of these credit lines have hurt my ability to purchase bargin REO from the bank. In Las Vegas CASH is KING and REO Banks don’t like to wait for the buyer to arrange financing. In las Vegas if the property is listed at or below $60,000 you better have cash or a the least OPM.