- Dennis Norman
Homeowners in all regions of the United States are seeing their home equity lines of credit (HELOCs) frozen or reduced and wondering what they can do about it. The Federal Reserve has published a guide explaining consumers’ rights and lenders’ responsibilities when credit lines are reduced and provides information for those seeking to have a credit line reinstated.
“5 Tips for Dealing with a Home Equity Line Freeze or Reduction” explains that lenders can lawfully reduce or limit a consumer’s line of credit regardless of whether the consumer has made timely payments. However, the lender must send a written notice of the action no later than three business days after the freeze or reduction goes into effect. The notice must include information about any other changes to the HELOC.
The freeze or reduction notice should include specific reasons for the action. The most common reasons for modifying the terms of a HELOC are a decline in the home’s value, or a change in the financial circumstances. Understanding why a lender froze a credit line may help a consumer take steps to have it reinstated to the original amount. For example, a lender may not know that significant home improvements have been made that increased the home’s value.
To obtain a copy of “5 Tips for Dealing with a Home Equity Line Freeze or Reduction” from the Fed Reserve click here.
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This recently just happened to me and I was angry to say the least. I have excellent credit but my interest rate was raised by 1% I don’t think this is fair.