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HELOCs Frozen: Preserving American Homeownership

Preserving the American Dream is a position paper authored by John Dugan, Comptroller of the Currency. “Preserving American Home Ownership” is the “initiative” rumored to be pondered by Countrywide Home Loans, IndyMac Bank, and Washington Mutual.

N.B.: The following is rumor; something that was “heard on the street”.

Jeffrey Smith reported, two weeks ago, that Countrywide is freezing some home equity lines of credit. The wholesale lending reps and escrow officers, in my own little network, were buzzing about the possibility of such an action from Countrywide, WaMu, and IndyMac.

More on this rumor as it develops. Today, it’s just a rumor. I think it’s comical the Countrywide won’t do anything without a PR/Marketing twist to it (as a marketer, I love it). It is rumored that the CFC initiative will be “Preserving American Home Ownership”

UPDATE:  While I haven’t confirmed the rumor with Countrywide, there is one disenfranchised Countrywide borrower, getting pummeled by the bubbleheads on a Yahoo message board.

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  • 12 comments

    12 Comments so far

    1. Bob in San Diego January 29th, 2008 8:13 pm

      It’s not a rumor.

      My buyer agent called me last night. He got a letter in the mail yesterday from Countrywide informing him that due to decreases in surrounding property values, his equity line was frozen as 1/15/2008.

      You will now see a run on the banks as people rush to draw down their helocs.

    2. Bob in San Diego January 29th, 2008 8:27 pm

      small typo above. Heloc was frozen as of 1/25/2008.

    3. Sean Purcell January 29th, 2008 10:28 pm

      You have to love corporate double speak “Preserving Amercian Home Ownership” LOL Actually this is 100% accurate… for those homeowners that still work at Countrywide.

    4. Laurie Manny January 30th, 2008 12:25 am

      This should get interesting for those involved in selling the U-First product which is dependent upon the Heloc to perform. I told them that program had more holes in it than swiss cheese!

    5. Brian Brady January 30th, 2008 8:26 am

      “This should get interesting for those involved in selling the U-First product”

      I didn’t even think of that.

    6. Phil Hoover January 30th, 2008 1:03 pm

      Geez, wonder how much panic in the streets that will cause???
      I have long believed the B of A/Countrywide deal will get renegotiated, or fall apart.
      I seriously doubt that B of A expected them to lose as much money as they just reported, or have their default rate rise to the levels they just reported.

    7. Bob in San Diego January 30th, 2008 9:20 pm

      Two more past clients got their notice today. The question now is will CW pull the plug on anyone trying to draw?

      Every Heloc they freeze frees up cash – could BofA have pushed for this action?

    8. Greg February 2nd, 2008 11:24 pm

      Got a letter from CW today saying that they were freezing my HELOC as of 1/25/08. Never a late payment in my life, FICO nearly 800, and 1st with CW also. This is for my home in Southern NH. Although I think it’s a legit move b/c home prices have dropped a bit in the area, their eagerness to protect themselves will result in plenty of Prime borrowers getting ticked and going elsewhere. Of course I’d probably do the same thing if I was running CW right now, trying to save a sinking ship.

    9. Clif February 8th, 2008 5:48 pm

      What you seem to forget is that U1st has an exclusive Heloc source. Hasn’t slowed me down one bit.

    10. Trish February 11th, 2008 10:10 am

      Not a rumor for Indymac anymore either. Received a letter Saturday that my line was frozen. I have a $0 balance on my HELOC, owe less than 50% of my home’s value on primary mortgage, no late payments ever, excellent credit score. Indymac claims home value has declined by >20%, which I seriously doubt in my area. To make matters more fun, I can’t close the line without paying a $300 fee since I’m in my 1st 3 years of having it open.

    11. Alan February 15th, 2008 5:40 pm

      IndyMac’s action, like CW, has more to do with their lack of liquidity than the borrower’s situation. They could’t even tell me how much they thought home values had declined in my area…

    12. Tom February 22nd, 2008 10:08 am

      I received a letter from IndyMac this week stating my HELOC has been frozen. I live on a lake in Minnesota where property values are not declining. Being conservative, I have at least $500,000 in equity in my house. I also am a realtor and know the market well.
      Seems like for homeowners like myself, they would encourage me to use more of my line than to take it away.