Countrywide did this to me a little over a month ago. Didn't lower my $30K HELOC, didn't revoke it-- just froze it, all of it, grrr.

Funny thing is, even though prices have dropped in my Northern Virginia neighborhood (have they ever-- I bought in 2003 for a great price, but 80% of the growth over *five years* is gone, poof), I still technically have plenty of equity to cover my HELOC, and then some. Even *after* the market cratered here, I probably have close to $60K equity in my house, yet CW froze my $30K loan.

I keep thinking I'll appeal it, but unlike others, I'm in no hurry to unfreeze the loan-- it was always there for emergencies, not for home improvement projects or trips to Best Buy.

Still, one day I'm going to want the line back. I'm thinking I won't ask for CW to reinstate it, I'll just take my business elsewhere from those criminal schmucks.

@Daveinva: One thing to possibly worry about is that if you lose your job, they will not unfreeze under any circumstances. Unless your job is absolutely bulletproof, you might want to get that taken care of.

I have $10k still available on my HELOC and I am terrified to try to use it even though it could come in handy. On the plus side, since it is variable rate, the monthly payment has been plummeting.

@downwithmonstercable: No job is bullet proof. If you show up drunk wearing the same clothes for three days straight, they tend to ask you to go home. Never mind the wreath of laurels and asking everyone to refer to you as the new Caesar.

indymac sent me a letter in September freezing my HELOC, then another letter telling me that Wells Fargo would love to have my business, followed up by a letter indicating that they didn't mean to send the wrong message with the previous letter.

I don't need to use my HELOC so I can find it amusing, but seriously, they froze a credit line saying market conditions had depressed the values of homes in my area. Even with the depressed values I still have 15x the equity in my home vs the value of the credit line. I was one of those silly people that put 35% down and bought what they could afford, jokes on me.

@jdhuck: How strange you mention that, I had a similar situation when I came into work screaming "this is sparta" and kicking people down the stairs.

We have one of those and used $4400 of $100k (better rate) for our granite counters. We've been paying it down at around $200-$300 a month. With the way interest rates are we're paying 3.5% on the balance.

Or you could do what businesses do all the time...

If you have a $20,000 Heloc and you have only taken ,say , $12,000 , draw the rest down and put it in the bank so that they can't freeze it.They're stuck with the deal that they agreed to ,but you don't have to go out and piss the money away. Just leave it alone and keep it available so that you don't get caught up in their "shifting priorities" or "repricing" games. You'll pay the interest that you owe,but you'll have the money earning some of it back in a savings account (pick the right savings account and the cost will be darn near zero) and you will get to write off the Heloc interest on your taxes.

Caution- Make sure that you read the part about not pissing the money away before you do this.

Ford (and GM) dis essentially the same thing last year when they borrowed money that they had no immediate need for (and before their banks cut them off) Now Ford will use that cash to tide them over . GM fed theirs into the UAW/Management Bonus/Retiree Viagra blast furnace and now they are screwed.

Good Luck !

ooh lovely... BoA gave me the shaft of cutting my HELoC waaay back in March. not like our house needs new siding or anything (that we can't afford now.) no warning, just a letter after the fact. with tactics like that, is it any wonder i'm in the process of dropping them like 2nd period Physics?

@Daveinva: Same with me only in Chicagoland and back in April. It was $30K as well. The funny thing is that I need to get a comparative market analysis of three comparable homes in a 1 mile radius that sold in the last 90 days to get draws authorized again. I called our realtor and he had bad news, only one such house. So the other option is an assessment, those cost $400-$500 and I need one to get a HELOC from my CU anyway. Guess which one will get my business?

The annoying parts to this are that we had a balance of $0. We had only used this line once in the past and quickly repaid it. Just a little while ago we wrote 3 checks for a total of under $600. We thought, hey 5% is less than not paying off our credit card in full like we always do. I spent two days dealing with the repercussions of three bounced checks.

I called and they said that they sent a letter back in April. We never got it. The funny thing is that all our statements from them were online. When I went and checked there was a link instead of a number for available credit. When I clicked it I got a dialog box with some verbiage about this value not being always correct and if I wanted it to be calculated. The next day $0 showed-up. I went back and looked at the message center, there was no message to us about the draw freeze. The rep said he could not resend a letter about the draw freeze, that made dealing with the bounced checks that much more fun.

And get this except for the first year, we paid $100 every year for the privilege of this line of credit. I have to close this thing in order to not have to pay next year. I forgot to ask about if there are any fees for closing it out before the ten years are up.

Countrywide are scum, they and leather face are largely responsible for this mess the worldwide economy is in. Just like you there is plenty of equity left in my house, I got a simple 30 year fixed rate mortgage with 20+% down and it was a house in quite bad shape. We put in close to $30K in repairs and improvements. But I know that what would happen is that the value of the home would be less than when we bought it. Even though there would still be plenty of equity at this point Countrywide would not lower the credit limit, they would simply still not allow draws because they hemorrhaged so much cash in the past due to the crap loans they made.

@jdhuck: If you worry about the dreaded draw code 33 (draws revoked due to falling home prices in your region) take the money out now and put it into a prime linked money market account or something to that affect.

Same thing happened to me with an Etrade HELOC. I just wish they didn't have me by over the barrel this way, and I could change lenders without incurring a cost, like I could when Citibank told me they were raising my interest rates due to their corporate greed and malfeasance (maybe they didn't use those words exactly, but that is the gist of it).

I can have it reviewed, though, if I have an appraisal done at my expense. Too bad they aren't held to the same standard.

I got mine up to $203k, then they froze it (citibank). I am at 3.10% on the loan as of today. It sure takes some crafty finance to own in California! I'll be paying down everything else before this. (First mortgage and biz credit lines) I'd love to be debt free, but this rate aint bad at all!

I don't have a HELOC. I was considering opening one just for the free toaster (or whatever) on the theory that if I ever lost my job I could just draw the full amount down and not repay that OR my mortgage. Cynical? Who me?

@downwithmonstercable: Well, thankfully I work for Uncle Sam, and in my experience the only way to lose a job there is to be indicted, which shouldn't happen to me (even if they catch me! ;-).

As for the HELOC freeze, it's totally an impersonal decision based on their "calculations" of the local real estate market(or so CW says-- in this case, I believe them).

Which is good to know, because if they had frozen my HELOC based on my credit score (north of 800) or payment history (spotless), I'd find a lawyer to sue their butts.

Still. . . probably going to appeal once enough homes get sold around here. I've got two that went recently, one similar and one absolutely identical to mine, and they both went for $70K+ more than what I owe on my house. Another sale or two like that and I plan on telling Countrwide they're on smack to keep me frozen.

I'm not too hopeful that'll work. Ahhh, cynicism.

None frozen so far. Although I do have one with Charter One at a rate of 2.49% on my last statement. This one should be adjusting down to 1.49% for my next cycle (prime - 1.51)

PNC line was at 3.49 so this one will adjust to 2.49 (Prime -.51)

National City line was at 4.25 so will adjust to 3.25(Prime+.25)

And no, because I know someone will ask, these lines are not all on the same property!

I maxed out my HELOC and kept the cash in a money market account. I basically made it impossible for them to deflate it. Sounds radical, but when the economic nightmare is over, I want my HELOC in tact. It's a great rate.

@310Drew: I think my numbers may be off by .25%. I think I calculated them based on 3.00 and not 3.25. Either way, cheap money !

@FrankenPC: I have done the same thing. When you can get money market accounts paying more than what you borrow for, it is well worth it. Even if it costs you a bit, interest is potentially tax deductible, and you can basically pay them back with money that really is theirs to begin with!

I have an HELOC with State Farm bank for 76.5k. After reading all of these, I went online to see if there had been any changes and lo and behold there was. They dropped my interest rate from 4.5% to 3.5%. Same credit limit. Long live State Farm! They have always done me right! Happy happy joy joy...

My WaMu heloc was cut, as was a friends. Another friend who had a Chase heloc (now WaMu and Chase are the same) frozen at her limit. Quick note: They freeze you if you currently owe more than they think they want to lend you, and they reduce if you dont.

The day after I got the 2/3rd reduction in my HELOC, I walked over to BOFA and started the process to open a new HELOC. Lots of hurdles (tax returns, an actual walk-through appraisal, paycheck stub). Still not done, but I think i'm close.

If you have no equity in your house, you have no home equity line of credit available. Tell FrankenPC that HELOC interest rates are higher than money market rates. Therefore, he is losing money on that deal.

All of you that say to take the money out and put it into an interest bearing account of some sort, that is a good idea. Those that add the interest is tax deductible, good luck should the IRS audit you. I believe that the interest is only deductible if used for improvements to your property.

Economic collapse, helped in great part by sub-prime, then option arm, then heloc loans. The first two have been cut, why not the third? lets face it, lots of people are using helocs as a cushion during job losses. The banks have enough bad debt.

Over the past few months I've been in the uncomfortable position at the credit union I work for of having to decide whose HELOC gets frozen. Usually there are two reasons: 1. Your home is no longer worth enough to have the amount of equity we gave you, or 2. Your credit has tanked (like paying your first mortgage late or piling on the credit card debt). For example, one woman in AZ I recently shut down owed 175% of the value of her home. This is NOT easy for lenders... why would we want to piss off our paying customers? This happens to protect the borrower, yes, but also to reduce risk for the bank/credit union/etc.

@jiminator: And what is wrong with using a HELOC as your cushion for a job loss as long as there is sufficient equity in your house? For me they did not decrease the credit limit they prevented all draws to the account.

Last night the water heater started leaking, it really has not been my week, and this is precisely the reason for a HELOC, but I don't have one available to me right now. I have something with a $30K credit limit, a $0 balance, and $0 available credit. This thing I had paid $800 for over the years. Now I need to pay $400 for a new one. Can you see why a bunch of us are really upset that Countrywide did not decrease the credit limit, but instead simply prevented all draws on the account?

I called around, plumbers are expensive. I have gotten estimates over the phone ranging from $800-$1000 for the work and new water heater.

@mzs: " I believe that the interest is only deductible if used for improvements to your property."

Your belief is incorrect.

You can deduct your HELOC interest up to $100,000. The problem that may arise, however, is that you may not be able to deduct the interet on a HELOC that exceeds the value of your collateral, i.e. your home.

Thus, in situations where your HELOC is *legitimately* frozen because you most certainly have lower home value than your equity, then you may no longer be able to deduct the HELOC interest.

Check with an accountant.

HomeComings (GMAC) froze mine to zero. I'm damn sure I have sufficient equity to cover the available balance.

I'm going to refinance in January.

I'm wondering if I'll get charged to close that frozen HELOC.

The bastards do some cheap non-specific "comparative market analysis" and you're required to pay for an expensive detailed appraisal of your property to get it back.

It is unfair. I paid money to open that HELOC and they froze it without reviewing my specific property valuation.