http://www.bloomberg.com/apps/news?pid=20601109&sid=adSiHtVyQXmc&refer=home
U.S. lenders had $1.1 trillion in home equity loans outstanding as of last year, up 89 percent since 2003, based on the Federal Reserve's Flow of Funds data.
Amid flashing neon signs along the Vegas Strip, residents are losing access to credit that might have financed businesses or bought cars and other goods.
As many as 15,000 people in Las Vegas, or 5 percent of the total homeowner population, had credit lines suspended by Countrywide and other lenders, said Brad Henderson, president of Henderson, Nevada-based mortgage banker and broker Evofi One.
Jerry Tao, a part-time lawyer and spokesman for Evofi One's parent company, lost access to his $50,000 Countrywide line despite earning more than $500,000 last year and having a credit score he says was between 750 and 770.
Replacing Pathfinder
Though he never accessed the line, Tao, 40, said he'd hoped to redo his backyard and replace his 1995 Nissan Pathfinder.
Credit scores are a calculation of the likelihood a person will pay bills based on past history.
Countrywide, the biggest U.S. mortgage lender, stopped extending credit to 122,000 borrowers nationwide whose homes fell below appraised values, a practice permitted by bank regulations, the company said in a statement.
Pasadena, California-based IndyMac and Seattle-based Washington Mutual say they evaluate borrowers individually. Bank of America says it's reviewing all its home-equity credit lines and taking actions permitted by lending agreements.
The Las Vegas housing-market crash represents a turnaround since 2003, when the local economy and real estate were booming.
``If you had anything on the ball, you could make it happen in Vegas,'' said real estate agent Donna Marie Gold, 62, who built a $4.5 million fortune buying and selling properties over six years.
After failing to complete a single sale last year, Gold said she fell $22,000 short each month on payments needed to maintain 14 properties. Now two to four months behind on some mortgage payments, she's lost access to a $250,000 Wells Fargo & Co. equity credit line.
`New York Minute'
``The whole thing was upside down in a New York minute,'' Gold said. ``There needs to be some forgiveness in this climate with regards to credit and rebuilding one's credit.''
John Simon, 42, borrowed $35,000 on low-interest credit cards in 2007 to pay down his $63,000 credit line and save on the 11.75 percent interest he says Countrywide charged. He expected to be able to access the credit line later. When Countrywide froze the line, he wasn't able to get money needed to pay his bills.
``They took away the last amount of cash I had to make all the payments on my father's retirement home,'' Simon said. ``From a business standpoint, this was the stupidest thing I ever did. But it was so easy.''
Blogged with MessageDance using Facebook
No comments:
Post a Comment