Another fall out from the housing slump seems to be that lenders are now starting to limit or freeze homeowners' lines of equity.
Locally homeowners are finding that lenders like Washington Mutual, Counrtywide Mortgage, and Bank of America are reducing lines of credit in some cases up to 32%.
While many understand that this reduction is just reflecting the drop in home prices, many feel that the way the lenders are going about it is wrong. In most cases there is no appraisal on site of the property and no consideration of the homeowner's credit history. It seems to just be straight across the board.
Understandably, lenders are concerned as there has been a 537 percent increase in losses on home equity loads since last year. During the housing boom lines of credit commonly were set at 100% of a homes value but now won't exceed 80 or 90%. Some banks are considering unfreezing some credit lines if a homeowner can prove that their home has not significantly depreciated.