• The TUGBBS forums are completely free and open to the public and exist as the absolute best place for owners to get help and advice about their timeshares for more than 29 years!

    Join Tens of Thousands of other Owners just like you here to get any and all Timeshare questions answered!
  • TUG has a YouTube Channel to produce weekly short informative videos on popular Timeshare topics!

    Come check it out for a chance to win a Free TUG membership (or renewal) just for helping out!

    Read more here
  • TUG has now saved timeshare owners more than $19,000,000 dollars just by finding us in time to rescind a new Timeshare purchase! A truly incredible milestone!

    Read more here: TUG saves owners more than $19 Million dollars
  • Our 2022 Timeshare Survey is now complete and the full results as well as our expert and witty analysis of each question is available here: Here We hope you enjoy reading the results as much as we did!
  • Follow the TUG Member Banner as it travels the world on vacation with Timeshare owners! Also sign up to get the banner sent to you so you can submit a photo of your vacation with the banner to share with TUG! Banner Thread
  • Sign up to get the TUG Newsletter for free! 50,000+ subscribers! Latest resort reviews and the most important topics discussed by owners during the week!
  • Our official "end my sales presentation early" T-shirts are available again! Also come with the option for a free membership extension with purchase to offset the cost!

    Read more Here
  • A few of the most common links here on the forums for newbies and guests!

Equity Line Decreased overnight - how to get it increased again?

Teresa

TUG Member
Joined
Jun 7, 2005
Messages
494
Reaction score
73
Points
388
Location
Medina, OH
Among other things, I have used my equity line to help my daughter pay for contract meals at college (they're pricey). So tonight I was going to do a transfer on the internet to give her $1800 for the quarter (sheesh).

My equity line WAS $135,000. I have just over $83,000 used and it hasn't been much over that (highest it ever got was $102K last year). As of tomorrow (8/25/08) it's been dropped down to $85,000. That's a $50K drop.

I know banks are running scared with all this housing slump/drop. I get it.

I'm guessing that this is an across-the-board hit and was done by computer. It left me with less than $1000 in available credit. I wonder what would have happened if I had written a $20K check a week ago.

Anyone out there have this happen to them and, if so, were you successful in getting it raised again (maybe not to the same level). If you were successful, tell me what you did to get the bank to listen to you.

Thanks!
 

Barbeque

TUG Member
Joined
Jun 6, 2005
Messages
695
Reaction score
1
Points
226
Location
California
Resorts Owned
Carlsbad Inn
Call your bank it might help but values all over the country have declined and the banks are running scared. Perhaps if your credit is good enough they may look at it. But it just depends on their situation too. Kind of a bummer if you paid fees to get the credit line.
 

Dave M

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
12,242
Reaction score
11
Points
623
Location
Sun City Hilton Head, SC
I haven't had it happen, but your experience is apparently becoming increasingly common, according to a recent Wall Street Journal article. The article had some suggestions for what to do when your home equity credit limit is reduced or frozen at its current outstanding balance. I'm paraphrasing from the WSJ article "In the Latest Chill for Homeowners, Banks Are Freezing Lines of Credit" on page D6 of the July 1 issue. (If you don't have a WSJ print or online account, you can find it at your library.)

1) Call the bank (or better yet, sit down with someone at the bank) to discuss your individual situation. Perhaps your income is higher than when you applied or your debt to income ratio is better than the bank believes.

2) Be prepared to spend a few hundred dollars for an appraisal to prove that your home hasn't lost as much value as your neighbors' homes, perhaps because you did some remodeling or added a few rooms.

3) Talk to other lenders, some of whom might well give you a higher line.

4) Be prepared to wait. If you do take your business elsewhere, today's credit approval process usually takes more time than in the recent past.

5) Start saving for those future expenses, since easy credit might be a long time in coming back.
 

nightnurse613

TUG Review Crew: Expert
TUG Member
Joined
Jun 6, 2005
Messages
2,079
Reaction score
47
Points
408
Location
Phoenix, AZ
Yes, this is happening more and more. Just the other day a friend of ours called and spoke to my husband. It seems AE said they had reviewed their credit and cut their credit limit in half. :eek: The flip side of this is that when they did that, they put account balances over 50 percent of credit limit (more like 90 percent) which immediately resulted in a decrease to their credit score which resulted in further decreases. :bawl: My husband tried to explain that it's just cock-eyed thinking. Years ago their mortgage holder wouldn't let them refinance their house when the interest rates dropped even though they had 50 percent equity. Refinancing would have saved them $150 a month which would have, in turn, IMPROVED their credit situation. He didn't have much luck explaining that either. No, no can't allow that!:shrug:
 

Kal

TUG Member
Joined
Jun 6, 2005
Messages
4,332
Reaction score
462
Points
469
Location
Redmond, WA
This thread sparked my attention to my line-of-credit. I had the home appraised at the peak of the real estate boom and worked out a new line of credit. So that makes me wonder how the bank will react in today's market. When I checked today, there is no change, but it's interesting that the interest rate is about 4%. Although I have a zero balance due, I might have to think about extracting value out of the 4%.
 

Brett

Guest
Joined
Jun 6, 2005
Messages
8,306
Reaction score
4,225
Points
598
Location
Coastal Virginia
My home equity line limits have not changed (Countrywide) but the limit amount was rather small in relation to the home value, (but home values have declined!)
I too will have to keep a watch on that. I remember the WSJ article and it caught some people unprepared - bounced checks, unable continue funding home repair projects, etc.
 

Teresa

TUG Member
Joined
Jun 7, 2005
Messages
494
Reaction score
73
Points
388
Location
Medina, OH
Update - I talked to the bank this morning

I called the phone number they (Chase Bank) give on the net to have your already existing line of credit increased. They sent me over to a recorded message about receiving a letter in the mail about this (I didn't - yet). Seems the letter goes out after they'ved dropped it so I will get it any day now.

'They' told me (the increase line people, not the recording) that this is most likely based on drops in value in the county where I live - not my credit rating (which is excellent). The original line was based on 85% loan-to-value ratio. We used most of it for an addition and it's nearly completed.

I haven't seen that much of a drop in property sales but I haven't really paid all that much attention to prices (since I'm not looking to sell but just wanted to see if we were 'stagnant' regarding moving properties around here). I'm going to see if I can find that out.

ANYWAY - the recording told us to send an appraisal that we must pay for and it must have our name on it or 'a financial instutition'. Must be less than 50 days old. Must be done by an FNMA appraiser. Must be one of the following appraiser forms: 1004, 1004C, 1025, 1073 or 2090 (whichever is applicable to our type of property). Told us where to send it and to include our names, our account number, the appraisal and a phone number where they can reach us.

So I guess I'm going to see if I can find out that percentage that things have dropped around here and see if it's worth hiring an appraiser for $2-300 dollars.

My biggest concern is that 'factor' they use about borrowed vs. available credit percentage that is part of your credit score. If my previous available credit was $135K and I was only using $85K then that percentage is $63%. Since they dropped the available down, that percentage is changed to 100% (at least on the equity line). I guess this is the affect on people who don't see themselves as 'caught up' in the housing problems (didn't lose a house, no foreclosure issue, good credit, still has a job, etc.). No one is immune. I know I could be worse off (as others truly are).

For those of you who have some room left on your equity line - you might want to look into the future a bit and see if there is a need to pull it out before it's pulled out from under you. If your interest rate is low enough, you can borrow it and throw it into a CD to cover yourself for some of the interest. I wonder what they would have changed it to if I had used more or less of the available.
 
Last edited:

Kal

TUG Member
Joined
Jun 6, 2005
Messages
4,332
Reaction score
462
Points
469
Location
Redmond, WA
It sounds like the line-of-credit is an ATM Machine. If you max out to the full credit limit you still have to make meaningful monthly payments. In the event of an emergency where cash is needed, what's next? CDs are not very liquid plus a 2% interest rate (before taxes) and at least a 4-5% charge for the full line-of-credit makes everything upside down.
 

Wonka

TUG Lifetime Member
Joined
Jun 6, 2005
Messages
1,064
Reaction score
0
Points
496
What about bank charges?

Our line of credit was set-up without a fee. However, there was a time commitment of some kind it had to remain open to avoid a $250 fee, or more even if the line of credit has never been used.

So, if the bank's can reduce the line of credit are they also letting people out of the fee contingency if they simply wish to cancel the LOC?
 

Teresa

TUG Member
Joined
Jun 7, 2005
Messages
494
Reaction score
73
Points
388
Location
Medina, OH
Only if you can use it.

It sounds like the line-of-credit is an ATM Machine. If you max out to the full credit limit you still have to make meaningful monthly payments. In the event of an emergency where cash is needed, what's next? CDs are not very liquid plus a 2% interest rate (before taxes) and at least a 4-5% charge for the full line-of-credit makes everything upside down.
You'd only pull out money now if you saw something in the near future that you'd need it for. There are CDs for 3-12 months you could stash it in. And if you really needed it for emergency cash, you would cash out the CDs. But once they reduce your credit line then there is no emergency cash there for you to use.

In the case of using it for an addition or remodel, if you're not done with it and know you'll need a certain amount of money to finish, taking it out now would be the thing to do - so you can finish.

Same thing with paying for college or something. If you were going to use an equity line to pay for that, taking it out now (rather than not having it available to take out later) may be wise.

Yes - you'd have to pay it back as is always the case. In our case, we would not be upside down. The house is worth about the same it was last year (more actually, because we're almost done with the addition/remodel) and I talked to the auditor for our county and the valuations of the area are about the same as a year ago based on sales prices.

I completely understand the bank's position - they're running scared and are taking extra precautions by doing an across the board cut. It could be that they are focusing on 'Ohio' or 'Cleveland area'. We're in Medina (south of Cleveland, West of Akron) where prices are more steady (Cleveland is taking a bath in muddy water and Akron is trying to use some old bubbles from the bathwater). However, banks are in the business of lending money. If they don't lend it out they aren't making any money. Then THEY are upside down (maintaining buildings, paying people (less of them), etc.). They've gone from one extreme to the other. There's a catch-22 here.

I purposely don't have a savings account (except for 401(k) and other retirement money) because any money that would go to a savings account is used to pay down debt. Yes - I'm disciplined enough to do that. And that's part of the reason I was using the equity line to pay for 'college food' - because instead of saving the money in an account that would be .02% (that's .0002) I pay it into the equity line and then pull it out when I need it.
Up until now that's worked for me very well. Really didn't see this coming as our credit is great and the housing market around here is stable.
 

Fern Modena

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
4,660
Reaction score
4
Points
36
Location
Southern Nevada
I just realized that you are paying $20. per day for your daughter's meal contract! Is it a must that she have one? There's no way around it that would be more reasonable? That's a whole lot more than most people spend for meals each day.

Fern
 

Big Matt

TUG Review Crew: Veteran
TUG Member
Joined
Jun 6, 2005
Messages
5,946
Reaction score
1,396
Points
599
Location
Northern Virginia
You should also look to see how much the bank will charge you to increase the line to closer to 90 or 100 LTV. Do the math and see if it's cheaper to:
1) increase the line, but pay a higher interest rate
2) get an appraisal that would prove higher property value
3) borrow from another source. You could always open a credit card at a very low rate and then pay it off with the home equity once you get some more room on that account.
 

bigrick

TUG Member
Joined
Jun 6, 2005
Messages
1,015
Reaction score
0
Points
36
Location
Sac, CA
For the long term, why not go to another bank and set up another HELOC with either the missing $50k or another HELOC entirely at your previous max?

I have two HELOCs on my home. When I added the second one I told the bank that the total of the two was more than I estimated my current value. The second bank said no problem. This was in 2006 so I know my value has gone down but no change in either HELOC credit limit.
 

Teresa

TUG Member
Joined
Jun 7, 2005
Messages
494
Reaction score
73
Points
388
Location
Medina, OH
Yes - she is required to have a meal plan

I just realized that you are paying $20. per day for your daughter's meal contract! Is it a must that she have one? There's no way around it that would be more reasonable? That's a whole lot more than most people spend for meals each day.

Fern
Yes - it's pricey and no way around it. Talk about being 'trapped'. Most colleges require freshman and even sophomores to live in a dorm (so they've got you there). MANY colleges require some sort of meal plan package if you're living in a dorm. We opted for the 14 meals/week plan and each meal works out to just over $8/meal. I give her some cash (not $8/meal) for the other meal during the day. There is an option for a 10 meals/week plan but that plan costs nearly the same as the 14 meals/week plan (so each meal cost more). Her meals cost more than the rest of us in the family (2 adults, 2 teens) combined. The foods 'okay' but nothing extravagant. I told her to not tell me what she's eating because she told me once she had a bowl of cereal with milk and juice for one breakfast. Not even fruit on it!
 

3kids4me

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
1,876
Reaction score
12
Points
498
Location
Connecticut
Our HELOC (also Chase) was also frozen last month, due to a blanket computer appraisal of area homes which resulted in our home being appraised for signficantly less than it was last November when the last appraisal was done.

Even if we got our own appraisal showing that our home value isn't that low (we did, and it isn't, although it has still declined), our bank also changed their loan to value ratio from 75% to 65%, so they would only honor our original line if we could get an appraisal for exactly what it was last November.

So, as DaveM mentioned, you can get an independent appraisal to show that your home is still worth what it was when you opened the line, or find another lender who has a higher loan to value ratio and try your luck with them.

Good luck.

Sharon

P.S. Just wanted to make you aware that the size of your loan isn't the issue as much as the total you owe or are approved to be loaned...so your mortgage plus your HELOC together as a percentage of your home's value. Since you had an addition put on after your line was determined, that will definitely significantly increase your home's value. However, instead of paying for an appraisal yourself, you might want to just go to a new lender who will likely do it for no fees to get your business.
 
Last edited:

3kids4me

TUG Lifetime Member
Joined
Jun 16, 2004
Messages
1,876
Reaction score
12
Points
498
Location
Connecticut
You should also look to see how much the bank will charge you to increase the line to closer to 90 or 100 LTV.
I think the OP will be hard pressed to find a lender (even her own lender) who will do this right now, because of the threat of further declining real estate values. Ninety percent LTV can quickly become 100 percent or even 110 percent and no lender (or consumer) wants to be in that position. As you mentioned, some banks have multi-tiered systems where one can pay a higher interest rate for a higher LTV, but in looking around ourselves, it seemed that most banks are favoring a cap of their LTV ratios for obvious reasons.
 
Last edited:

Ray Taft

TUG Member
Joined
Mar 3, 2008
Messages
10
Reaction score
0
Points
1
Location
Colonial Heights
Eliminated Lines of Credit

I had the same thing happen to me. Lost $50K overnight because the bank had decided to cut LTVs. This is just a reaction to the changes in the real estate and credit markets. With the losses and abuse the HELOC loans have been taking, I don't know that it would do a lot good to have another appraisal done since, if values have gone down, and LTVs we know have gone down, don't know if you would be able to get any more cash out of your home. I would suggest that anyone with equity left on their line, especially someone with a 4% rate and put it in some kind of investment to have the cash liquidity. They can't take it away from you if you have already spent it.

To the poster whose bank said get and appraisal done in the bank's name and send it to them, don't make that mistake. I am an appraiser and ordering your own appraisal, even with the bank's name on it is not supposed to be used by the bank. Let them order it and you can pay for it at the door. Doing otherwise is a good way to waste $350.
 

Big Matt

TUG Review Crew: Veteran
TUG Member
Joined
Jun 6, 2005
Messages
5,946
Reaction score
1,396
Points
599
Location
Northern Virginia
I just increased my HELOC limit to get a rate decrease (yes...higher line, less rate). They also offered a higher LTV up to 90%. I declined that because I wanted the lower rate. It was a pretty large company, Suntrust. I had a zero balance and a FICO of 803 so they aren't taking on much risk.

I think the OP will be hard pressed to find a lender (even her own lender) who will do this right now, because of the threat of further declining real estate values. Ninety percent LTV can quickly become 100 percent or even 110 percent and no lender (or consumer) wants to be in that position. As you mentioned, some banks have multi-tiered systems where one can pay a higher interest rate for a higher LTV, but in looking around ourselves, it seemed that most banks are favoring a cap of their LTV ratios for obvious reasons.
 
Top