|
 Home Equity Lines
of Credit Taken Away
From Almost All Las
Vegas Home Owners
In
yet another sign of
the grim economic
crisis, Countrywide
Financial Corp. has
suspended the home
equity credit lines
of almost all its
Las Vegas customers.
This action is not
only limited to
Countrywide or Las
Vegas for that
matter.
Homeowners' pain is
acute in Las Vegas,
where property
values soared 50
percent or more
during 2004 and 2005
and since have
plummeted. Las Vegas
housing prices
declined 23 percent
in February, leading
20 U.S. cities
tracked by the
S&P/Case-Shiller
Home Price Indices.
Nevada had the
highest U.S.
foreclosure rate in
March: one of every
139 households.
Many other cities
with declining home
values will also be
affected by this new
line of thinking
(forgive the pun).
Wachovia, Washington
Mutual and other
major banks have
already begun taking
actions to cut
unused portions of
home equity lines.
Banks
are taking such
action to reduce
potential losses
from the housing
bust. Fred Cannon,
an analyst at Keefe,
Bruyette & Woods
told MarketWatch
last month that if
enough lenders pull
home equity lines of
credit, it could
make industry losses
even worse.
"Lenders have
presented the
reductions in home
equity lines of
credit as a prudent
response to the
rising home equity
credit costs,
declining home
prices, and the
risks of rising home
equity exposure from
the drawdown of
lines of credit,"
Cannon wrote.
"While for an
individual lender,
such actions appear
prudent, the
consumer response to
the reduction of
lines can create
additional problems
for the home equity
lenders and for the
economy as a whole,"
he added. "Cutting
unused lines will
add to, rather than
subtract from,
credit costs on home
equity portfolios."
As
many as 15,000
people in Las Vegas,
or 5 percent of the
total homeowner
population, had
credit lines
suspended by
Countrywide and
other lenders, Brad
Henderson, president
of Henderson,
Nevada-based
mortgage banker and
broker Evofi One,
told Bloomberg on
Thursday.
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Gambling911.com News
Wire
Originally published
May 8, 2008 10:49 pm
EST
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