Homeowners With Frozen/Terminated HELOCs May Have Cause Of Action

The Sarasota Herald Tribune reports:

• Some of the millions of homeowners who have seen their home-equity lines of credit (HELOC) sharply curtailed, or even completely jerked out from under them, may have a legitimate gripe with their lenders. While banks certainly have the right to reduce, suspend or even terminate revolving lines of credit in which the borrower's home serves as collateral, they can't do so willy-nilly. There are several consumer-protection laws that must be followed. And even when the law is on their side, banks are required to reinstate credit lines when the reasons for the reduction or suspension no longer exist.

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• [T]wo exceptions to [the law] are obvious and straightforward. Lie to get the loan or miss a couple of payments, and the line of credit can be yanked.

• But a third exception -- when actions adversely affect the property pledged as collateral or the creditor's security interest in the property -- is somewhat more ambiguous and is worth exploring in detail, especially by borrowers who think they've been treated unfairly.

For more, see Some home-equity lines of credit can't be rescinded.

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