Red alert for all of you.
I have a home equity line of credit with Countrywide. I got a form letter in the mail from them yesterday. It states that my equity line has been frozen due to the decline in property values in my area. Since so may people rely on their home equity lines to bridge the gap during hard times, (like now), I could see this was not a good thing so I began to investigate. Here is what I found out.
According to the representatives at Countrywide, ALL lenders who have extended home equity lines are doing this, or will be doing this in the near future. This is nationwide. I am told that Wells Fargo will be sending out their notices in another week or so. Others are “waiting to see what happens with Countrywide” and are waiting in the wings to follow suit. Countrywide said that the are using some on-line service to determine the value of your property. They are using “comps” within 5 miles. If their estimate of value has dropped by 2% or more, they sent out this notice. If you can prove your property value is higher than the value they had on file to begin with, they might reinstate your credit line. Therefore, if you took out your equity line in recent years, your value may not be as much or more than it was then and you may have just lost your “safety net”.
I believe this could be devastating to the entire economy of the USA and a real shock to a lot of unsuspecting homeowners who need that equity line right now. If you are in that position, you may want to draw on your equity line immediately before they freeze your account. If you have any influence, you might want to contact your representatives to see if they can help stem the tide.
T.G.
