Will they freeze HELOC?

Question

If things go south with C19 I’ll need my HELOC to cover mortgages. Plus my renters are do not have work from home jobs. How many months should I prepare for? Should I withdrawal all I possibly can before they freeze it?

Rob McDonald · Answer

I was chatting with CPA yesterday. His thoughts were that as soon as the Government starts sending a bunch of money to banks then that is the time to pull all the money out of the HELOC. The current 2T injection of money went to other industries. If the next injection includes the banking system then I will pull all the cash out.

Chris Meadors · Answer

@Renee Lee

Im in Napa and most of my lenders have frozen HELOCs. First Republic can do them but at 65% LTV with tight requirements. I heard Wells Fargo might be a good bet right now. Act fast. Things are tightening every day (per my lender partners).

Marcus Auerbach · Answer

The FED will flush the market with money, the goverment will do everything possible and necessary to keep the economy on live support as long as we have to isolate. So yes, I would maintain a strategic cash reserve, but I don't think you will see any credit freezes, if anything the opposite.

Remember, we don't have to beat the CV or stay at home until it's disapeared, we only have to allow for medical capacity to get caught up - flatten the curve.

Next flu season (winter) Covid19 will probably come back, just like influenca does every year and kills up to 50k Americans, and it does not make the news, it's normal. But most cases are mild, we will have gained herd immunity and we will have developed a vaccine or treatment.

All we have to do right now is buy our medical system some time.

Cameron Tope · Answer

I agree with @Theresa Harris - I doubt they'll freeze HELOCs.

As far as how much you should have in reserves the answer is - enough to make you sleep well at night.

Paul Shannon · Answer

I have a HELOC that I count on for short-term funding for cash acquisitions.  I freed up other capital to be opportunistic outside of real-estate and hope that HELOC stays available for reserves and potential cash buys.  Without it, I would need to change strategy/allocation.

I can understand banks not opening new HELOCs, but ALL please post to this forum is you begin to hear open lines of credit being frozen!

Cody Zuniga · Answer

I'm still able to do HELOCs but as of the 6th we dropped from 90% to 80% LTV. We are still doing them at 90% but this would impact the rate significantly. We did 100% LTV at the higher rates last week, those days are over. Most of my competitors have suspended new helocs and home equity loans. Even as a lender myself I am a bit worried about the credit lines being frozen. The bank I work for did not freeze or revoke lines in the 2008 recession but things are very uncertain and I'm not sure what to expect. I'd hate to have to pull all my funds and pay interest on it at this time, but I would be more disappointed to lose access entirely. If anyone has seen line freezes please share as I'm sure many of us would like to pull if we had too. Thanks for the topic!

Chris Meadors · Answer

Sorry, thanks for the clarification.  My local lenders have put a freeze on any NEW HELOC's. Thanks! Hope this helps...

Renee Lee · Answer

@Rob McDonald

Thanks! I’ve never had a HELOC frozen, but I’ve never seen the government do what it’s doing... It’s like they are trying to bankrupt people. Pulled all the money last week, might need it for the mortgages and my job loss (which did happen).

Rob McDonald · Answer

Am I to interpret this as you have a HELOC and your lender froze it on you recently or that your lending partners are not issuing new HELOCs?

Renee Lee · Answer

@Theresa Harris

I do have reserves for 3-4 months, but I expected to be laid off too. So I want to be overly prepared, my bet is we are looking at at more than 3 months of closures. Hope I’m wrong!

Will they freeze HELOC?

Most Popular Reply