Do you have a Home Equity Line of Credit? If so, you may have already received a letter freezing your existing line of credit. Last week Citi Home Equity “has taken steps to limit new draw activity upon these loans. These actions limit new draw activity, and do not impact existing balances. Borrowers are expected to pay their current balances per the terms of their loan, and will receive a letter with the details on their specific line if it has been impacted.”
For example, if you have a $100,000 line of credit with a $25,000 balance you may receive a letter that reduces your line of credit down to the current balance of $25,000. Therefore, leaving you no more room to pull cash from. We are seeing a lot of this in the Bay Area so don’t be surprised or feel that it has anything to do with you personally. The bank needs to protect itself as home prices continue to decline in some areas.
Now on to Option Arm Re-Sets…http://www.hussmanfunds.com/wmc/wmc080414.htm published the graph below, care of Bank of America. We are finishing the 2nd highest re-set month for ARM’s. The month of May will be the next highest re-set month for sub-prime borrows. What does this mean for Sub-prime borrowers? Well, if they have improved their credit they need to go in and talk to a mortgage professional about refinancing into a better loan. We can help; feel free to call us if you want to discuss your options. For the rest of the market, that could mean more foreclosures down the line (Fall/Winter timeframe) as these home owners are unable to pay their higher monthly mortgage payments. The remainder of the year will be interesting. For buyers it’s a great time. With all the instability in the market, prices are unbelievable low in many Bay Area Cities (except
Source: Bank of
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