Here’s a new tactic we haven’t seen before: mortgage originator AmTrust called blogger BeThisWay and offered her $50 to voluntarily close her home equity line of credit (HELOC), possibly in response to the recent class action lawsuit against them for illegally closing HELOCs. She writes, “Well, I’d like to keep my HELOC. But I have to figure out AmTrust’s next move. What will they do if not enough people voluntarily surrender their HELOCs? Are cancellations next? Am I better off taking the $50 now, or waiting, hoping they don’t cancel it?”
The Obama Administration announced new details about its massive foreclosure relief program — and the Washington Post says that it includes a refinancing program for homeowners with little equity in their homes, but who otherwise would be able to refinance. The Post has a quick interactive tool that will help you to determine whether or not you qualify for the program.
With so many people facing foreclosure these days, it’s a good idea to educate yourself about the types of scams that take advantage of folks who are having trouble paying their bills. Even if you are doing ok, perhaps you can help someone else by recognizing a scam.
Over on the Credit Slips blog, Elizabeth Warren posted an email from a bankruptcy lawyer who was stunned at the horrible deal one of her clients got from Wells Fargo on an equity loan on a car.
If you have an open home equity line of credit you were counting on for renovations or other projects, you might want to read CNN Money’s article about how lenders are freezing them around the country. The main triggers for HELOC freezing are credit score changes and a rapid drop in home value in your area. The freeze may also be a computer-determined action, so if your HELOC suddenly goes away and you don’t think it was justified, it may be worth checking your FICO score and then contacting the lender to reopen the line or renegotiate it.
Ah, one of the questions for the ages. Shall you or shall you not pay off your credit cards with home equity? Let’s say you ran up a credit card on a bunch of crap you didn’t need and are now being charged 15%. You’ve seen the error of your ways, and now are interested in paying off your debt. How should you go about it? Should you use Home Equity? Blueprint For Financial Prosperity suggests that, while you may be saving big money by cutting your interest rate, you should think the decision over carefully.