Sam's TEAM Blog

It had to happen.

The "A" paper HELOC (Home Equity Line of Credit), lender of choice served notice today, that as of August 1st, submissions for HELOC 2nds will be limited to 95% CLTV.

HELOC's are often used to provide credit card type access to a home's growing equity and had been used in purchase money circumstances to allow a rapid pay-down of principal. This tactic could allow a homeowner to maximize credit availability at purchase and provide for ready access of funds for home improvement or emergency needs.

While this shouldn't come as a surprise, it does.  Fortunately there is enough time to submit a couple of client's files for their 2nd mortgage needs prior to the deadline.

The Portland-Vancouver-Salem area had appeared somewhat immune to the lending world woes outside the Northwest, but this shift will certainly have an impact.  It does mean the performance of HELOC's nationwide is now coming home to roost.

While HELOC 2nd's to 100 CLTV will probably still be available, just a bit more scarce and probably more expensive rate wise.

The week has ended and now the clean up begins for the coming week and a week's long class session out of town.

Frustration has mounted with the remaining sub-prime providers as one lender's slimmed down back office has taken an extremely long time to provide payoff information on a client's current mortgage.

This dalliance is putting us perilously close to blowing through a rate lock on very favorable financing.  The refi first mortgage can be extended, but the 2nd HELOC being used for home improvement and debt payoff cushion can not be renewed.

We'll find a way to make this work for our client, but it is a reminder of why we have first tier, second tier and only if we have to financing choices.  It does seem that no matter what one does, there is an unaccountable 3rd party which will fall short of performance norms.