Some banks are canceling or freezing HELOCs

Some real world news for you all. As the title of the post says, some HELOCs are getting yanked. The reason: declining market. My understanding is that Countrywide is pulling all HELOCs and my understanding is that the form letter states that it's because the home is in a declining market. Even if it's not!

I suspect they are looking at this as reducing liability and I supposed they are right on one hand. The probably have a lot of good notes that are current too and they are hurting themselves by cutting these off. I feel for the people whose credit scores with get dinged because the bank canceled the credit line even when they did everything right.

Investors and home owners need to be aware of this because this can hurt your ability to leverage. A HELOC can be a great source of down payment capital, carrying costs, repair costs, etc. This can radically alter your strategy! For instance a HELOC can be a spectacular source for option payments, earnest money, etc., so be prepared.