Recently we wrote about Chase’s approach to getting rid of it’s WAMU Home Equity Lines of Credit (HELOCs).  This is not much different than what banks are doing to their credit card customers.  (See yesterday’s blog post.)  Basically, banks have now decided that their interests in lending are no longer aligned with their customers’ interests in borrowing.  Not a good situation if you are the borrower.  Because banks are throwing all these curve balls, we are trying to keep up with them and keep our MoneyCafe.com community aware of what’s going on.  Hopefully, armed with this information consumers can plan accordingly.

Here is what we found out about how Chase is handling its HELOC customers.  If Chase decides the price of your house has dropped since getting your loan, they have been freezing and suspending lines of credit.  The equity in the home or your payment history is not being considered when making their determination.  The trigger is simply whether the home value has dropped since getting the loan.  There is no way to find out how many people are affected, but it seems this approach would include just about everybody.  For instance, let’s say you have a home that was worth $600,000 but is now worth $500,000 and have a $200,000 first mortgage and a $200,000 HELOC, because your value dropped they have frozen the line of credit and reduced the line to zero.  Even though you have $300,000 in equity they will not allow you to access your line of credit.

If you are stuck in this situation, Chase has laid out a path to unfreeze your HELOC.  They are putting the burden on the borrower to prove that the value of the house still supports the original loan.  If you pay several hundred dollars for an appraisal using their appraiser […]