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<\/div>\nFor many Americans, home equity lines of credit aren’t a sure thing right now, with a 19 percent drop nationwide, The Wall Street Journal<\/a> (WSJ) reported.<\/p>\n According to data from credit reporting firm Equifax, as reported by WSJ, banks’ holdings of home equity lines were down 9 percent from a year ago, and originations of home equity loans were down 43 percent between March and May of this year.<\/p>\n WSJ reported that many lenders, including big names like Wells Fargo<\/a> and J.P. Morgan<\/a>, have become stricter on offering new credit lines, called HELOCs<\/a>, citing the uncertainty of the pandemic. In late April, Wells Fargo announced that it would stop accepting the applications due to the pandemic’s economic uncertainty and the mass amounts of applications it received. Financial analysts have said that, in a down economy, when a home goes into foreclosure, the lender who made the primary mortgage gets paid first, so banks need to be careful.<\/p>\n And other lenders have tightened their rules on offering loans, attempting to shield themselves from the landslide losses from the 2008 economic recession, when borrowers used their homes as cash sources and then ended up going down.<\/p>\n Home equity loans, which are generally lump-sum payments with a fixed repayment schedule, initially became popular because low interest rates made it popular for borrowers to perform cash-out refinancings.<\/p>\n But the equity that U.S. residents have in their homes has steadily risen for the past decade, bolstered by strong growth in home prices. Those who are out of work and may have benefited from HELOCs might end up shut out of the system due to the tight restrictions the banks have implemented.<\/p>\n Borrowers who wanted to use their home equity as a cushion are now finding themselves without any protection at all during the pandemic, WSJ said.<\/p>\n The number of HELOCs has dropped in recent months, falling 65 percent between April and May as compared to the last six months, WSJ reported, citing market-research firm Competiscan. The current financial environment has seen many banks limiting their HELOCs to a borrower’s primary residence, a safer bet than investment properties, and others are limiting their cash-out refinancing options.<\/p>\n Tags:<\/b> Pymnts <\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"See Campaign: <\/strong>http:\/\/http:\/\/wellsfargo.com\/<\/a>
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For many Americans, home equity lines of credit aren’t a sure thing right now, with a 19 percent drop nationwide, The Wall Street Journal (WSJ) reported. According to data from credit reporting firm Equifax, as reported by WSJ, banks’ holdings of home equity lines were down 9 percent from a year ago, and originations of home equity … Continue reading Borrowers Come Up Short On Home Equity Lines In Pandemic<\/span><\/a> Continue Reading