Banks freezing home equity credit lines

You know that home equity credit line you thought would substitute for an emergency fund if you ever had an emergency? Think again. Banks are "freezing" credit lines left and right, as I report in my story today. A freeze means you can't charge any more than you already have. Credit lines generally are frozen with no prior notice, to prevent you from running up debt at the 11th hour. That means if your credit line hasn't been frozen yet and you know for sure you'll need the money, you'd better borrow it now. That could be especially important if you've got a home improvement project in process. Of course it's always best to avoid borrowing if it's not necessary.

Banks are giving the general decline in real estate values as the reason for the freezes. If your home value goes down, you have less equity and they have less security for any money you borrow.

 

Comments

American Express sent me a letter they were lowering the credit available on my AmEx Blue card. They said it is based on a recent review of my credit report. Ive taken on 500k in mortgages in the last 6 months but have never been late on a single payment anywhere on my credit report! Go figure...

Please anyone with an economic perspective, WHAT DOES LOWERING THE FED FUNDS RATE ACCOMPLISH? Any lower and we invite another bubble.

[HCB]

I wonder why neither the candidates nor the media ask why we are in a "crisis." Bush said tax cuts would produce jobs and a robust economy and insists the cuts be made permanent while he spends nearly 3 billion a week on his "war." Bush agreed with the equity marketers that they should be taxed at 15% - less than their gardeners - so they would keep the money here and put it into job creating businesses. But Blackstone paid its CEO more than 300 million dollars in salary last year AND gave him a 4.7 BILLION dollar bonus. Where are the jobs? The guy could buy his own aircraft carrier.

WHY are we in this "crisis?" How does it end? Higher taxes on everyone except the ones who should be paying more?

Why be responsable, the government will not reward it. Instead do not pay your mortgages, let the government rescue you, as they will do with many foreclosures, and failing banks and brokerages. The government is making things worse rather than allowing the deck of cards to crumble because nobody believes anybodys financials anymore, and the confidence is deflating like a Pearlman blimp. Get ready.

With Bear Sterns failing, are the floodgates opening? And why are taxpayers bailing them out while another broker buys them for a bargain basement price with an extremely weak dollar? Are we seeing this right?