Subprime Meltdown: What about HELOCs?

[Diane Kennedy]

Chewsie, I know this doesn't make you feel any better. We've gotten letters from Indymac and Greenpoint so far. The one from Greenpoint cracked me up - we have about $600K mortgage on a property where the nearest sold comp is $1.6 mill (so about $1 mill equity). They said the reason they froze our HELOC was due to a change in my husband's credit score. Yep, they're right. It did change - it went up 50 points.

 

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[AroundTheWorld]

Yep, they're right. It did change - it went up 50 points.

:smilielol::smilielol::smilielol:
:smilielol::smilielol::smilielol:

What will they come up with next?

We froze it because you like vanilla ice cream?


Seems like in the last month, I've been getting more offers then ususal to apply for HELOC's from the mortgage companies we have mortgages with...

 

[phlgirl]

Thank Russ. We will figure it out. We just didn't anticipate this. We are only at 40% LTV...Gone are the days of 85% LTV...it seems gone are the days of 55% LTV. Honestly I figured we could easily tap another $30k.

We should of maxed it out, hindsight and all that..sorry to hear you got bit too!

But the good news is the house looks realy really good!

I told RE Taipan we will look back on this and laugh.."Remember when we rehabbed that house put almost $100K into and it was worth LESS than when we started"....:smx6:

I am sending you a PM with contact info for a guy I work with here in FL. I asked him this morning and he can do work in IL. He is able to go to 75% LTV on investment properties. It is a cash out refi product and they will want to see a record of your improvements (I send a Quickbooks report). We have been locking in rates at around 6.75%

I don't know your exact situation but if you think a product like this might help, feel free to give him a call.

 

[BeingChewsie]

Thank you very much!! we will certainly give him a call!

 

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[randallg99]

Chewsie, I know this doesn't make you feel any better. We've gotten letters from Indymac and Greenpoint so far. The one from Greenpoint cracked me up - we have about $600K mortgage on a property where the nearest sold comp is $1.6 mill (so about $1 mill equity). They said the reason they froze our HELOC was due to a change in my husband's credit score. Yep, they're right. It did change - it went up 50 points.

I think GreenPoint has liquidated their assets/sold them off and folded up since this post...

 

[andviv]

It seems now Suntrust is also doing the same review...
Got the letter for one of ours last week.

 

[yveskleinsky]

bump for status. Being Chewsie, how are things going? Did you guys get everything figured out with the house in IL?

 

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[Peter2]

.....

 

[yveskleinsky]

Poor racoon. He shouldn't have been speculating in areas that he didn't fully understand. If only he had joined this forum first, he'd understand the difference between a condo conversion and a cardboard box. ...Live and learn.

 

[venom]

I still think its interesting that they pulled the loans when the rates went back down....
Its a tad late for this, but those same banks are sending me checks for my credit cards. They have good teaser rates but I am sure they are looking to drown a few more err racooons

 

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[hakrjak]

Yeh, the term isn't as long as a HELOC, but you always have credit card convenience checks to fall back on during these tough times. I've got a pile of them here that are offering 0% for 6 months and so forth. Only thing is that the fees are becoming more and more common, and higher than they have been in the past -- Sometimes 3% of the amount you write the check for, which is like a really expensive origination fee if there is no cap.

- Hakrjak

 

[andviv]

Only thing is that the fees are becoming more and more common, and higher than they have been in the past -- Sometimes 3% of the amount you write the check for, which is like a really expensive origination fee if there is no cap.

True, however....

You as a rehabber probably know this, sometimes you need the money to fund a rehab and, given current lending market situation, can't get a loan to complete a 5-months deal. The only alternative seems to be hard money lenders, 10 points, 12% APR, or something similar.
When compared to this, that is still cheap money, the 3 points are pretty much nothing compared to the ability of completing the deal.

 

[hakrjak]

True, however....

You as a rehabber probably know this, sometimes you need the money to fund a rehab and, given current lending market situation, can't get a loan to complete a 5-months deal. The only alternative seems to be hard money lenders, 10 points, 12% APR, or something similar.
When compared to this, that is still cheap money, the 3 points are pretty much nothing compared to the ability of completing the deal.

Word... As far as funding rehabs is concerned though, I usually put that on my corporate card so that I can bank those points, and avoid fees (Only pay monthly finance charges, if I carry the balances at all). $20,000 = 20,000 pts, which is usually 2 round trip plane tickets for my girl & I to somewhere special that we can celebrate finishing the rehab, and so I can get my mind OFF the business for a week, and let my realtor do his job

Cheers,

- Hakrjak

 

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