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Home | Business
S&Ls given warning about freezing credit
The Office of Thrift Supervision warns against improperly lowering credit limits or altering rules for home-equity loans.
By KEVIN G. HALL, McClatchy Newspapers
Last update: August search engine for loans 26, 2008 - 11:19 PM
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WASHINGTON - After a rash of consumer complaints, the federal agency charged with regulating savings and loan institutions issued guidance Tuesday warning lenders they could not arbitrarily change the terms of home equity loans.
The Office of Thrift Supervision (OTS) issued a six-page letter of guidance to the institutions, called real estate bridge loans thrifts, spelling visillia savings and loans
out their obligations on home equity lines of credit.
Such revolving lines of credit were bad credit home loans low downpayments popular during the housing boom of 2001 to 2005, when people fidelity bank car loans could easily borrow against the equity in their homes to pay for college tuition, to build a garage or vha loans to remodel a kitchen. beneficial auto loans Equity is the home's market value home loans for bad credit
minus the outstanding loan balance.
Now, a national housing slump is into fha mobile home loans its second year with sagamore loans no alternative education loans end in sight. Many borrowers own homes worth prosper loans less than the payday loans in georgia amount of their loan, and home equity astrive loans lenders are tightening up amid rising defaults.
As ca no income loans national housing problems worsened, complaints to the OTS grew that great lakes school loans some of the 830 thrifts under its supervision were freezing the credit promised money tree pay day loans to borrowers usa home loans and altering rules for accounts that weren't supposed to understanding mortgage loans be changed.
"There's an uptick in complaints, written and by no credit check bank loans telephone," OTS spokesman William Ruberry said in an interview.
Given the rise in complaints, the OTS guidance serves as ford loans a warning shot by regulators, who across the scope of the federal government failed to recognize rampant, shearton fort worth delorme loans presido shoddy lending that sparked an unprecedented national run-up in home sba business loans prices. That run-up proved unsustainable consumer reports home loans and led to the plunge in national home prices and low income home loans a market in its worst shape since the government loans student Depression.
"We just wanted to give our institutions a heads-up that our examiners are going to be focusing on this area," Ruberry said of the home equity loans.
Specifically, the OTS guidance reminds thrifts that they can freeze promised credit under approved circumstances like a substantial loss in value of the underlying property. But any reduction of a borrower's credit limit below the outstanding balance cannot require the borrower to make a higher payment.
And given that entire neighborhoods in hard-hit states like California, Arizona and Florida are at risk of widespread foreclosure because of steep drops in home values, thrifts were reminded they cannot freeze home equity lines for broad geographic areas.
Instead they must weigh each rehab loans loan individually to determine when there has been a "significant decline" in the value of the collateral, the home. That "significant" decline is generally viewed as a 50 percent drop in the home price farmington home loans from the time when the home equity line of credit was offered.
The thrift supervisor payday loans austin texas also told auto loans great rates lenders they cannot charge a fee for restoring the credit once the condition leading to the freeze has private student loans for no credit
been short term installment loans
determined to have been fixed.
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