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99% of the people out there do not understand that HELOCs are callable without cause (e.g. without you defaulting), entirely at the discretion of the issuing bank, as are nearly all commercial lines of credit.
Holy smokes. Even the "doomiest" of us doomers didn't see this one coming. Expect a firesale of expensive German cars and luxury SUVs to start showing up on Craigslist.
Aldreth, can you post a link to the original article?
Aldreth: is there a reference link you can give? Thanks.
But why would the WaMu want to call those loans, even if they can? Don't their books look bad enough now -- why open another can of worms?
The link was to a blog where it says it is leaked info and that they are just going to do it on the 27th, tomorrow. Guess we'll have to wait and see.
Is this for real? What am I missing? Why would they want to put themselves into a position where they're forced to take back so many houses?
angelique, I think they're counting on the borrowers selling off their luxury goods they bought with that money. It's all about liquidity, and forcing these borrowers to start coughing it up fast.
Klarke's right. If banks start to do this, people will be selling off the stuff like crazy. Does anyone know yet if this applies to original loans as well as refis?
Good bye H2 with 22 inch rims and 32 inch plasmas. Hello 98' Toyota Corolla.
I could see the banks taking away available credit on HELOC’s
In many cases they probably should as to whether they can…well that sounds like another piece of info I’ll have to research. Didn’t see that clause in my own HELOC paperwork.
ooops, I see. Helocs.
I bought 2 homes pre-bubble never did the ATM cash refi or sucked the HELOC. Did I miss something? I read somewhere its good to have for a cushion. I thought thats what emergency funds are for.
From the comments on that blog, the author wrote:
There is no link to the story because it hasn’t happened yet. A friend of mine who works for WaMu told me about this new plan which rolls out the 27th of this month, one thing I forgot to mention is this will only effect 3,000 accounts for now. My assumption is this number will grow as we are only 1 year into 3 years of increasing mortgage problems.
Oh and HELOC contracts are written so they can be changed at any time, all lenders reserve this right.
Don't go jumping off any cliffs folks, this is not happening. The HELOC I have with WAMU--is an adjustable with a 10 yr term. So once they give me the money, they have to honor the 10 year loan agreements, and it's not payable until the HELOC matures. They do reserve the right to adjust my available credit --that may happen if I'm late on a payment, or they run my credit and find out that I'm upside down. But they CANNOT demand full payment prior to HELOC maturation. At least that's what is in my contract.
As noted above, even if it's not in someone's contract, it makes no logical sense for them to do so. If people are paying, why bother--they are earning 8% off of me--that's a pretty good ROI.
Anyway, I'll bet my 22's that this will not happen, and is just intended to freak out the gullible.
I agree with Realtor_Gri. It makes sense that they'd reduce the line of available credit if housing values have dropped, especially if they reduce the unused portion. Calling in the already-used portion is frightening.
Get ready for that phone call tomorrow.
''is just intended to freak out the gullible.'
Well it sure made you pay attention. I pictured you spitting out your latte and scrambling for your docs to scrutinize the fine print. Sure, no freaking out there.
Geeez klarek, now your acting like Butters
socal, I think OakAsFan is actually quite terrified. And by that measure, his/her quote is probably right. The gullible are the ones that thought their house was a non-stop money maker and now they're in way over their heads.
Well, I read my agreement when I SIGNED it, when it SHOULD be read!!
so maybe gullible was the wrong word--but the one I'd like to use probably gets me in trouble with the Zillow folks.
Anyway, anyone stupid enough to put their family's financial future at risk, and sign a contract without reading and understanding it completely probably deserves to be freaked out by these posts because they probably are short a few lightsbulbs in that chandlier.
I had a $20k HELOC on my house in California in 2005. Never again! What I didn't understand at the time is the trouble it would cause when my spouse and I decided to purchase a new house. We had deliberately chosen not to pay off the low-interest HELOC, rather we accelerated our payments to pay off our car and maxed our 401k and other investments. We knew that the sales price for the house would cover the HELOC. Unfortunately, when we went to buy our new house on the other side of the country (which we were buying with 85% cash!), the timing of the closings conflicted, and we needed a short-term bridge. Our original lender wouldn't play, and we ended in a last minute rush to find a lender who would guarantee the loan. Lesson learned: no more mortgages, first or otherwise.
i have a 130K heloc on my investment property, balance is zero... I have it there, just in case I need to buy something expensive, like a wildly discounted house... I am going to the gym now, but I will read through the loan docs when I get back, and see if they do reserve the rights to call it at any time. However, if you have already taken the money and spent it on say a car or pool, I think they will have a world of trouble getting it back, as you are living within the terms of the loan...
I have a 250K heloc with a zero balance... I have it for the same reason Azrob does, or for an emergency. I hope they dont lower my limit.
BTW,
BTW Im with Chase.
Nothing wrong with having a heloc, in fact I think it's a good idea if you're fiscally responsible (the average person is NOT). It's having an absurd balance on it that isn't good.
"Assuming they spent the entire HELOC (does anyone think they didn’t?), and assuming the negative amortization on the first mortgage has increased the loan balance, the total debt on the property exceeds $1,500,000. The asking price of $1,249,000 does not look like a rollback, but if the property actually sells at this price, the lender on the HELOC (Washington Mutual) will lose over $300,000."
... and, it's free and anonymous
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WAMU HELOC going NUCLEAR
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Aldreth
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uhoh
Washington Mutual customers are in for an ugly Christmas surprise from their bank. WaMu plans to start reducing existing home equity lines of credit (HELOC) as early as this week without notifying their customers prior to doing so.
Here is an example of how it will go down. If you owe $50,000 on a heloc and WaMu reduces your limit to $40,000 then you have $10,000 due immediately.
---Immediately? Are you kidding me?
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