I just spoke with a homeowner who bounced a check to her tree service because Citibank suspended her home equity line of credit before notifying her. When she finally received a notice from Citibank in the mail, it suggests that (PDF link) Citibank is apparently suspending home equity lines of credit nationwide due to falling home values. The same thing apparently happened to Nina at Queercents just over a week ago.
The Citibank HELOC contract apparently gives them the right to suspend or reduce the credit limit of accounts when the homes value drops too far. But Citibank based its decision on a general finding that “home values in your area, including your home value, have significantly declined,” not a specific appraisal.
Further, Citibank has not simply reduced the available credit limit to compensate (which would be difficult, since it does not actually know the home’s value), but has suspended the account entirely. Andthe biggest problem, as my caller demonstrated, is that already-written checks will bounce, because Citibank is suspending accounts before it notifies its customers. Surprise!
Obviously, since a HELOC is tied to the value of the home, lenders should be able to reduce the available credit if the home value declines. But they should also (1) have to show the home value actually has declined, and (2) notify its customers before it suspends their accounts.
[photo: Wikipedia]
If you are in Minnesota, contact The Glover Law Firm, LLC, for a free case evaluation. In any other state, you can find a consumer rights lawyer using the National Association of Consumer Advocates lawyer database.
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I recently received a letter from GMAC that they are supsending my HELOC. The letter stated that this action was the result of a payment default/past due status as of the date of the letter (11/21/08). I pay my bill online through their site and it seems as though my payment posted on 11/28. The bill was due on 11/20.
anyway I was pretty suprised so i gave them a call only to get tansferred around and hung up on. I called again today and spoke with a rep who told me that the reason why i got this was because I was 8 days late with the payment in November. doesnt make sense if the letter is dated 11/21. I have NEVER missed a mortage or HELOC payment and both my wife and I have good paying jobs and have a lot of equity in our home. On top of all this the Rep told me that she would not listen to excuses. Wow that got me mad. It seems that Banks have cast a wide net and they dont make a solid attempt at seperating good customers from the ones who default. In reading my HELOC terms under “Suspension Events” there is no mention of when one payment is applied late, that the HELOC gets suspended. Now i need to check my credit to make sure they didnt screw that up on me. I am pretty mad at how this went down and if there is someone out there who is willing to file a class action then please count me in. We just gave these @holes Billions of our hard tax paying money and to turn around and stick it to us is too much. I am looking at some of these other posts and I am really sick that this is something they are just getting away with. Let’s hope not for long !!!
Here’s a new twist – I got a letter dated 12/9/08 from Citibank stating that my check to my insulation contractor had been returned unpaid. THEN I got “THE LETTER” dated 12/12/08 letting me know that my line of credit has been suspended. They can’t bounce checks BEFORE letting you know the account’s suspended, can they? I’m sending all my documentation to Citibank and have already repaid the contractor out of my checking account, but I wouldn’t have had the insulation work done if I had known I couldn’t use the HELOC. Thanks for the heads up, Citibank. Bet your execs don’t have to worry about drafty homes in the winter.
I just got my letter stating my HELOC has been reviewed based on my request and they lowered it from 250k to 155k. That works fine for me and is realistic.
I help people buy and sell homes and have increasing heard such stories. Many of my clients are active adults looking at resort-lifestyle communities like retreatatcarmel.com in Putnam County NY. These active adults have worked hard and paid their bills and are now being penalized without even realizing it until writing a check on a home equity line of credit, using a promotional balance transfer or bill consolidation check, etc. I have clients who have written checks against their home equity line of credit and the check bounced. It was the first time they used it and the bank responded they closed the account due to inactivity and my client was never notified before doing so.
My firm and several others are in the process of filing a lawsuit concerning the early termination fee. If you would like additional information, you may contact me at equityloanearlytermfee@pwarnerlaw.com.
I have a HELOC with National City, never late on any payment to anyone ever. Wrote a check from my heloc to myself to place in my checking account to begin paying for the renovation of my home. It has taken me 2 years to get through my permitting process with the full anticipation of using my HOME EQUITY LINE OF CREDIT to do the renovation. My loan to value should be still at 70-75% even with the market downturn. I have given contractors downpayments on the work to be done which has depleted alot of my savings. After writing myself a check National City denied payment. After I received notice from my bank by mail that the check bounced,the very next day I received a letter from National City dated April 21, I received the letter on April 30th, the check I had writen was on April 25th. Really bad timing!!!!! This letter stated that effective 3 days from the date of the letter my line would be shut down. 3 days after the letter was written it was still in the damn mail. Somehow it took 9 days to get to me from Kentucky to Maryland via mail. The check bounced then they proceeded to charge me $30 posted on my next statement, for bouncing the check that they cancelled on me. So now I am unable to finish my renovation, unable to get my deposit money back and have lost my credit line. Two years of BS with permitting and engineering and $25000 later, I have a permit that is worthless if I cannot use my equity line for the repairs. After reading this blog I’m curious to see if this has now affected my credit. If there is a class action I would love to be in on it.
I am in the same boat as Chad. I just spent the last 8 months obtaining permits for a renovation that my house badly needs (no insulation, single pane windows, rotting wood). I spent 17K of my own savings for the architect, structural engineer, geotechnical engineer, surveyor, and of course the City of Seattle. I intended to use my HELOC with Citibank for the construction. Last week I wrote a check to myself from my Citibank HELOC for $15,000 so I could start on the footings and stem walls and guess what? It was returned. Now my bank is assessing me the fees. I called Citibank and was told that my account had been suspended because of falling home prices. They also said that I was notified via mail last November, which is a lie. Thanks Citibank. I just spent 17K of my own money to facilitate the process of improving my homes value and you completely cut my legs out from under me. Now my home is partially deconstructed and I don’t have the money to put it back together.
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