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Letter Re: Countrywide Turns Off the Home Equity Lines of Credit Tap
James,
I just received an email from my Countrywide Account Executive that they
are suspending further draws against Home Equity lines
[of credit]. They have reportedly started mailing suspension letters last
week to 122,000
borrowers.
Who
knows how many more could get those based on the markets and Countrywide’s
present situation. If you know someone who has [a home equity line of
credit] and is going to need the funds, they might want to draw out the
money right away and put it
somewhere safe. A lot of people use home equity lines as emergency funds.
- MB in Boise
JWR Replies: That is a useful data point. It is indicative
that the nascent recession will be deep and lengthy. Sadly, it has been consumer
credit that
has kept the US economy afloat. I wouldn't be surprised if other home mortgage
lenders follow suit.
OBTW, as previously mentioned in the blog, I do not recommend
taking on additional debt, except in exceptional circumstances such as a
stay in a hospital. When the layoffs come,
debt servicing
will be at least problematic. It may even be catastrophic.
