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Wednesday, May 28, 2008

More banks freeze home equity lines

by Calculated Risk on 5/28/2008 11:22:00 AM

From the Cleveland Plain Dealer: Banks freeze home equity lines as home values fall

While the practice started a few months ago in other parts of the country, it's just now hitting Northeast Ohio as banks from Fifth Third to Chase to AmTrust reduce their exposure to over-leveraged consumers. Most banks that haven't yet frozen home equity lines are looking at doing so.
AmTrust spokeswoman Donna Winfield said the bank's move to freeze equity lines here "was across the board" in areas where property values have declined and among customers who had less equity left.
We are about to see mounting losses for lenders from HELOCs, and less consumer spending - especially for autos and home improvement - as lenders restrict HELOC borrowing.