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#1 The_Man

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Posted 20 May 2008 - 10:03 AM

Two years ago we bought our new house a couple of days before we settled on the one we were selling. Basically, I was going to be about $150,000 short at closing on the new house (the amount of equity I was bringing from the old house).

So my mortgage guy set me up with a HELOC at closing for the $150,000. Don't ask me how I suddenly had $150k in equity in a house I hadn't even bought yet, I just did. So I used that HELOC to make up the shortfall at settlement, then paid it down to $0 2 days later when my old house settled.

Since then, I used the HELOC to get a new furnace/AC and have a balance of about $4000. Yesterday, the lender tells me that my house no longer maybe be worth the value of my mortgage + my HELOC, so they were shutting off any further access to the HELOC. I asked if they could knock the HELOC down to a figure they were comfortable with, like $50k, but no dice. I am probably going to pay off the account then open a new HELOC somewhere with a no points/no appraisal deal going on.

While this is basically just an annoyance to me, this whole thing makes me wonder about people who maybe are struggling to make their monthly mortgage payment and have been dipping into their home equity line to cover it. If they're suddenly cut off (and the guy on the phone indicated that First Horizon had just done this to lots and lots of people), then a whole new wave of foreclosures is likely.

Meanwhile, the change in standards cracks me up. Two years ago, they were giving me equity in a house I didn't even own yet. Now, they're shutting down rock solid customers for no reason, except that all the bad decisions they made back then are burning them now. Ironically, those decisions are going to cost them twice -- in the money they lose on the bad customers, and on the money they lose by chasing off the good ones.



#2 eoMMan

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Posted 20 May 2008 - 10:07 AM

This is why there are down payments and mortgage insurance.

And people automatically assume that their house/property can't go DOWN in value. It happens.

#3 placeholder98

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Posted 20 May 2008 - 10:16 AM

Yeah this is a common occurrance with value declines and the lending industry getting slaughtered. As long as you can make the payments on it, who cares.

I got an 80/10 when I bought my house a little over a year ago, the 10% being a fully drawn home equity loan. I've just paid interest on it over this time and I got a similar letter. Doesn't matter to me. My payments are lower now than they were when I closed.

A lot of lenders who avoided the subprime mess have been hit with exposure to these home equity loans. So they're taking appropriate measures to make sure they aren't increasing their risk by people sucking all of the equity out of it and then sending them the keys.

Don't take it personal. It's just how the market is right now.

Good luck getting another HELOC. I will bet money that if your current lender is shutting you down, there isn't another lender out there who will lend on your home value.

It's just a really tight credit market still. My buddy is looking for a $1M home and has awesome credit. There are no jumbo loans available so he's looking into getting a $417 first and a 2nd for the balance. Pretty insane that the 2nd will be bigger than the first but that shows how upside the credit markets will be for another couple months according to some people I know on Wall Street.

Personally, I'd just make the payments until everything settles and look to refi once more products come back on the market.

You're making this sound like this is a new thing...the majority of this has already occurred.

This change in standards is what happens with every cycle. Now you know and can take advantage of it next time.

This is why I recommend to (smart) people to suck out all of their cash out of their HELOC and put it into a money market account. You'll likely earn slightly higher after tax interest especially since it is compounded versus simple (which is how the banks are calculated). This way when the credit markets turn the bank can't shut you out of the additional capital that was committed to you. You already have it. You just can't spend it so if you don't have discipline you're likely screwed regardless. If you try to be the "good" borrower and not take it out, the bank will likely shut you down on LTV constraints regardless and you'll be much less liquid.
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#4 johnnyrock62000

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Posted 20 May 2008 - 12:19 PM

Yeah this is a common occurrance with value declines and the lending industry getting slaughtered. As long as you can make the payments on it, who cares.I got an 80/10 when I bought my house a little over a year ago, the 10% being a fully drawn home equity loan. I've just paid interest on it over this time and I got a similar letter. Doesn't matter to me. My payments are lower now than they were when I closed.A lot of lenders who avoided the subprime mess have been hit with exposure to these home equity loans. So they're taking appropriate measures to make sure they aren't increasing their risk by people sucking all of the equity out of it and then sending them the keys.Don't take it personal. It's just how the market is right now.Good luck getting another HELOC. I will bet money that if your current lender is shutting you down, there isn't another lender out there who will lend on your home value. It's just a really tight credit market still. My buddy is looking for a $1M home and has awesome credit. There are no jumbo loans available so he's looking into getting a $417 first and a 2nd for the balance. Pretty insane that the 2nd will be bigger than the first but that shows how upside the credit markets will be for another couple months according to some people I know on Wall Street.Personally, I'd just make the payments until everything settles and look to refi once more products come back on the market.You're making this sound like this is a new thing...the majority of this has already occurred.This change in standards is what happens with every cycle. Now you know and can take advantage of it next time. This is why I recommend to (smart) people to suck out all of their cash out of their HELOC and put it into a money market account. You'll likely earn slightly higher after tax interest especially since it is compounded versus simple (which is how the banks are calculated). This way when the credit markets turn the bank can't shut you out of the additional capital that was committed to you. You already have it. You just can't spend it so if you don't have discipline you're likely screwed regardless. If you try to be the "good" borrower and not take it out, the bank will likely shut you down on LTV constraints regardless and you'll be much less liquid.

I understand the desire to stay liquid but I don't see how this is sound strategy. Simplistic Example: Money market paying around 3% and HELOC at Prime is 5%. That's -2% or so.
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#5 BuddyKnuckles

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Posted 20 May 2008 - 12:24 PM


Yeah this is a common occurrance with value declines and the lending industry getting slaughtered. As long as you can make the payments on it, who cares.I got an 80/10 when I bought my house a little over a year ago, the 10% being a fully drawn home equity loan. I've just paid interest on it over this time and I got a similar letter. Doesn't matter to me. My payments are lower now than they were when I closed.A lot of lenders who avoided the subprime mess have been hit with exposure to these home equity loans. So they're taking appropriate measures to make sure they aren't increasing their risk by people sucking all of the equity out of it and then sending them the keys.Don't take it personal. It's just how the market is right now.Good luck getting another HELOC. I will bet money that if your current lender is shutting you down, there isn't another lender out there who will lend on your home value. It's just a really tight credit market still. My buddy is looking for a $1M home and has awesome credit. There are no jumbo loans available so he's looking into getting a $417 first and a 2nd for the balance. Pretty insane that the 2nd will be bigger than the first but that shows how upside the credit markets will be for another couple months according to some people I know on Wall Street.Personally, I'd just make the payments until everything settles and look to refi once more products come back on the market.You're making this sound like this is a new thing...the majority of this has already occurred.This change in standards is what happens with every cycle. Now you know and can take advantage of it next time. This is why I recommend to (smart) people to suck out all of their cash out of their HELOC and put it into a money market account. You'll likely earn slightly higher after tax interest especially since it is compounded versus simple (which is how the banks are calculated). This way when the credit markets turn the bank can't shut you out of the additional capital that was committed to you. You already have it. You just can't spend it so if you don't have discipline you're likely screwed regardless. If you try to be the "good" borrower and not take it out, the bank will likely shut you down on LTV constraints regardless and you'll be much less liquid.

I understand the desire to stay liquid but I don't see how this is sound strategy. Simplistic Example: Money market paying around 3% and HELOC at Prime is 5%. That's -2% or so.

good question, i watch my MM rate go down on an almost daily basis
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#6 Dvorak

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Posted 20 May 2008 - 12:34 PM

I got the same letter from my lender. HELOC withdrawal privileges revoked.

Other than the initial dispursement at closing when I bought my house, I haven't drawn anything off of it. In fact they never even sent me the checks but I didn't care because I had no intention of ever using it. I've been a month ahead of payments since day 1 and have been paying an extra $100/month.

Boy, I really want to invest more in my home now...

Nice consumer confidence booster.

#7 The_Man

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Posted 20 May 2008 - 12:52 PM

I got the same letter from my lender. HELOC withdrawal privileges revoked.Other than the initial dispursement at closing when I bought my house, I haven't drawn anything off of it. In fact they never even sent me the checks but I didn't care because I had no intention of ever using it. I've been a month ahead of payments since day 1 and have been paying an extra $100/month. Boy, I really want to invest more in my home now...Nice consumer confidence booster.

First Horizon? I'm so annoyed about having to go through the reinstatement process, but I also like the security that having a HELOC provides. If it means paying for a new appraisal, forget it.I also wonder what this does to my credit score. I've heard they're based on how much of your available credit you use -- so using $4k of a $150k line was probably pretty good for the score. Can't imagine losing access to all that credit helps the score.

#8 stbugs

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Posted 20 May 2008 - 12:57 PM


I got the same letter from my lender. HELOC withdrawal privileges revoked.Other than the initial dispursement at closing when I bought my house, I haven't drawn anything off of it. In fact they never even sent me the checks but I didn't care because I had no intention of ever using it. I've been a month ahead of payments since day 1 and have been paying an extra $100/month. Boy, I really want to invest more in my home now...Nice consumer confidence booster.

First Horizon? I'm so annoyed about having to go through the reinstatement process, but I also like the security that having a HELOC provides. If it means paying for a new appraisal, forget it.I also wonder what this does to my credit score. I've heard they're based on how much of your available credit you use -- so using $4k of a $150k line was probably pretty good for the score. Can't imagine losing access to all that credit helps the score.

I am not sure if the credit line on the HELOC works the same way as credit card debt. To be honest, I have no idea though. I always thought it had more to do with credit cards than anything else, but again, I am not 100%. The reason I think that is because your mortgage and HELOC are tied to your home, versus unsecured credit card debt. It wouldn't surprise me at all if the HELOC was lumped into the monthly payment bucket, i.e. how much you have to pay each month, versus that available credit calc with credit cards.

#9 Dvorak

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Posted 20 May 2008 - 12:57 PM


I got the same letter from my lender. HELOC withdrawal privileges revoked.Other than the initial dispursement at closing when I bought my house, I haven't drawn anything off of it. In fact they never even sent me the checks but I didn't care because I had no intention of ever using it. I've been a month ahead of payments since day 1 and have been paying an extra $100/month. Boy, I really want to invest more in my home now...Nice consumer confidence booster.

First Horizon? I'm so annoyed about having to go through the reinstatement process, but I also like the security that having a HELOC provides. If it means paying for a new appraisal, forget it.I also wonder what this does to my credit score. I've heard they're based on how much of your available credit you use -- so using $4k of a $150k line was probably pretty good for the score. Can't imagine losing access to all that credit helps the score.

Amtrust. They said I could pay for re-appraisal--forget that. I am worried about what it might do to my credit score as well. $0 available credit on any account can't help the score much.

#10 Pip's Invitation

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Posted 20 May 2008 - 01:01 PM

I got the same letter from my lender. HELOC withdrawal privileges revoked.

So did I. I've not drawn on it and have no plans to, so it doesn't really matter. (The lender set up the HELOC in lieu of PMI -- which was fine with me since it's more tax-deductible.) It's not fun to hear your lender tell you that they've lowered their assessment of your home's value, though.

one chick sent me a pic that obviously wasn't her and then admitted (on the first date no less) that she slept with over 36 dudes (she was 22 years old) AND was :hifive: by a pair of brothers.

To this day, I don't know if she meant actual brothers or black guys.



I dated a girl who's favorite two restaurants were Applebees and Olive Garden, if she hadn't let me p0rk the bum i would've dumped her over this alone.


#11 placeholder98

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Posted 20 May 2008 - 01:02 PM


Yeah this is a common occurrance with value declines and the lending industry getting slaughtered. As long as you can make the payments on it, who cares.I got an 80/10 when I bought my house a little over a year ago, the 10% being a fully drawn home equity loan. I've just paid interest on it over this time and I got a similar letter. Doesn't matter to me. My payments are lower now than they were when I closed.A lot of lenders who avoided the subprime mess have been hit with exposure to these home equity loans. So they're taking appropriate measures to make sure they aren't increasing their risk by people sucking all of the equity out of it and then sending them the keys.Don't take it personal. It's just how the market is right now.Good luck getting another HELOC. I will bet money that if your current lender is shutting you down, there isn't another lender out there who will lend on your home value. It's just a really tight credit market still. My buddy is looking for a $1M home and has awesome credit. There are no jumbo loans available so he's looking into getting a $417 first and a 2nd for the balance. Pretty insane that the 2nd will be bigger than the first but that shows how upside the credit markets will be for another couple months according to some people I know on Wall Street.Personally, I'd just make the payments until everything settles and look to refi once more products come back on the market.You're making this sound like this is a new thing...the majority of this has already occurred.This change in standards is what happens with every cycle. Now you know and can take advantage of it next time. This is why I recommend to (smart) people to suck out all of their cash out of their HELOC and put it into a money market account. You'll likely earn slightly higher after tax interest especially since it is compounded versus simple (which is how the banks are calculated). This way when the credit markets turn the bank can't shut you out of the additional capital that was committed to you. You already have it. You just can't spend it so if you don't have discipline you're likely screwed regardless. If you try to be the "good" borrower and not take it out, the bank will likely shut you down on LTV constraints regardless and you'll be much less liquid.

I understand the desire to stay liquid but I don't see how this is sound strategy. Simplistic Example: Money market paying around 3% and HELOC at Prime is 5%. That's -2% or so.

you're not looking at the entire equation. one you are comparing pre tax interest rates, not the tax adjusted interest rate. two you are not taking into consideration the effective interest rate of compounding versus simple. and three you're assuming that all of it has to be in a money market and not a bond or another investment that will not risk capital but pays higher yields than the 3% MMs are paying now.even if it is a push (which if you invest wisely it isn't), cash is king.i'm not here to convince you though, i'd suggest looking more into this alternative strategy.
It's 'bout to get hectic.

#12 placeholder98

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Posted 20 May 2008 - 01:02 PM


I got the same letter from my lender. HELOC withdrawal privileges revoked.

So did I. I've not drawn on it and have no plans to, so it doesn't really matter. (The lender set up the HELOC in lieu of PMI -- which was fine with me since it's more tax-deductible.) It's not fun to hear your lender tell you that they've lowered their assessment of your home's value, though.

actually pmi is deductible now.
It's 'bout to get hectic.

#13 Drunken Cowboy

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Posted 20 May 2008 - 01:09 PM


Yeah this is a common occurrance with value declines and the lending industry getting slaughtered. As long as you can make the payments on it, who cares.I got an 80/10 when I bought my house a little over a year ago, the 10% being a fully drawn home equity loan. I've just paid interest on it over this time and I got a similar letter. Doesn't matter to me. My payments are lower now than they were when I closed.A lot of lenders who avoided the subprime mess have been hit with exposure to these home equity loans. So they're taking appropriate measures to make sure they aren't increasing their risk by people sucking all of the equity out of it and then sending them the keys.Don't take it personal. It's just how the market is right now.Good luck getting another HELOC. I will bet money that if your current lender is shutting you down, there isn't another lender out there who will lend on your home value. It's just a really tight credit market still. My buddy is looking for a $1M home and has awesome credit. There are no jumbo loans available so he's looking into getting a $417 first and a 2nd for the balance. Pretty insane that the 2nd will be bigger than the first but that shows how upside the credit markets will be for another couple months according to some people I know on Wall Street.Personally, I'd just make the payments until everything settles and look to refi once more products come back on the market.You're making this sound like this is a new thing...the majority of this has already occurred.This change in standards is what happens with every cycle. Now you know and can take advantage of it next time. This is why I recommend to (smart) people to suck out all of their cash out of their HELOC and put it into a money market account. You'll likely earn slightly higher after tax interest especially since it is compounded versus simple (which is how the banks are calculated). This way when the credit markets turn the bank can't shut you out of the additional capital that was committed to you. You already have it. You just can't spend it so if you don't have discipline you're likely screwed regardless. If you try to be the "good" borrower and not take it out, the bank will likely shut you down on LTV constraints regardless and you'll be much less liquid.

I understand the desire to stay liquid but I don't see how this is sound strategy. Simplistic Example: Money market paying around 3% and HELOC at Prime is 5%. That's -2% or so.

Most HELOC's are higher than that too.
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#14 Drunken Cowboy

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Posted 20 May 2008 - 01:10 PM

Two years ago we bought our new house a couple of days before we settled on the one we were selling. Basically, I was going to be about $150,000 short at closing on the new house (the amount of equity I was bringing from the old house).So my mortgage guy set me up with a HELOC at closing for the $150,000. Don't ask me how I suddenly had $150k in equity in a house I hadn't even bought yet, I just did. So I used that HELOC to make up the shortfall at settlement, then paid it down to $0 2 days later when my old house settled.Since then, I used the HELOC to get a new furnace/AC and have a balance of about $4000. Yesterday, the lender tells me that my house no longer maybe be worth the value of my mortgage + my HELOC, so they were shutting off any further access to the HELOC. I asked if they could knock the HELOC down to a figure they were comfortable with, like $50k, but no dice. I am probably going to pay off the account then open a new HELOC somewhere with a no points/no appraisal deal going on. While this is basically just an annoyance to me, this whole thing makes me wonder about people who maybe are struggling to make their monthly mortgage payment and have been dipping into their home equity line to cover it. If they're suddenly cut off (and the guy on the phone indicated that First Horizon had just done this to lots and lots of people), then a whole new wave of foreclosures is likely.Meanwhile, the change in standards cracks me up. Two years ago, they were giving me equity in a house I didn't even own yet. Now, they're shutting down rock solid customers for no reason, except that all the bad decisions they made back then are burning them now. Ironically, those decisions are going to cost them twice -- in the money they lose on the bad customers, and on the money they lose by chasing off the good ones.

Two years ago the house was worth way more. Banks are always happy to make secured loans as there is little risk. As soon as your house value goes down the loan isn't secured anymore.
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#15 stbugs

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Posted 20 May 2008 - 01:43 PM

By the way, were are you located? I wonder if folks in the highest foreclosure rate areas were affected. Dvorak is from OH, which is in the top 10, almost 2x the national average. Nevada, Florida, Michigan, California, Colorado, Ohio, Georgia, Arizona, Illinois and Indiana were the top 10.

What is amazing is that CA and FL combined have about one-third of all of the US foreclosures. I would assume lots of letters going to those 2 states.

#16 The_Man

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Posted 20 May 2008 - 01:51 PM

By the way, were are you located? I wonder if folks in the highest foreclosure rate areas were affected. Dvorak is from OH, which is in the top 10, almost 2x the national average. Nevada, Florida, Michigan, California, Colorado, Ohio, Georgia, Arizona, Illinois and Indiana were the top 10.What is amazing is that CA and FL combined have about one-third of all of the US foreclosures. I would assume lots of letters going to those 2 states.

I'm in Maryland. No doubt it's been a bubble area.And I don't begrudge the lender scaling back its exposure on my house, but to summarily cut off access to the line and then force me to pay for a new appraisal for reinstatement irritates me. I wish they would have just said, "Hey, we're chopping your HELOC from $150k to 25K" or whatever. Particularly in light of my credit score and history with the lender. If the corporate office doesn't give on the appraisal fee, I'll probably go to my mortgage rep and see if he can do anything for me.

#17 johnnyrock62000

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Posted 20 May 2008 - 01:59 PM



Yeah this is a common occurrance with value declines and the lending industry getting slaughtered. As long as you can make the payments on it, who cares.I got an 80/10 when I bought my house a little over a year ago, the 10% being a fully drawn home equity loan. I've just paid interest on it over this time and I got a similar letter. Doesn't matter to me. My payments are lower now than they were when I closed.A lot of lenders who avoided the subprime mess have been hit with exposure to these home equity loans. So they're taking appropriate measures to make sure they aren't increasing their risk by people sucking all of the equity out of it and then sending them the keys.Don't take it personal. It's just how the market is right now.Good luck getting another HELOC. I will bet money that if your current lender is shutting you down, there isn't another lender out there who will lend on your home value. It's just a really tight credit market still. My buddy is looking for a $1M home and has awesome credit. There are no jumbo loans available so he's looking into getting a $417 first and a 2nd for the balance. Pretty insane that the 2nd will be bigger than the first but that shows how upside the credit markets will be for another couple months according to some people I know on Wall Street.Personally, I'd just make the payments until everything settles and look to refi once more products come back on the market.You're making this sound like this is a new thing...the majority of this has already occurred.This change in standards is what happens with every cycle. Now you know and can take advantage of it next time. This is why I recommend to (smart) people to suck out all of their cash out of their HELOC and put it into a money market account. You'll likely earn slightly higher after tax interest especially since it is compounded versus simple (which is how the banks are calculated). This way when the credit markets turn the bank can't shut you out of the additional capital that was committed to you. You already have it. You just can't spend it so if you don't have discipline you're likely screwed regardless. If you try to be the "good" borrower and not take it out, the bank will likely shut you down on LTV constraints regardless and you'll be much less liquid.

I understand the desire to stay liquid but I don't see how this is sound strategy. Simplistic Example: Money market paying around 3% and HELOC at Prime is 5%. That's -2% or so.

you're not looking at the entire equation. one you are comparing pre tax interest rates, not the tax adjusted interest rate. two you are not taking into consideration the effective interest rate of compounding versus simple. and three you're assuming that all of it has to be in a money market and not a bond or another investment that will not risk capital but pays higher yields than the 3% MMs are paying now.even if it is a push (which if you invest wisely it isn't), cash is king.i'm not here to convince you though, i'd suggest looking more into this alternative strategy.

Please explain further the pre-tax interest vs tax adjusted interest.I figured the compounding is good for another .3% but didn't think that was material enough to mention before.Now you changed your position from MM to a bond or other investment. Sure, if you can borrow money at 5% and invest it at 5% or 10% thus securing your access to that credit, great. But that's a different strategy than you outlined above. Wouldn't your credit score drop as you maxed out your HELOC?You make this sound like it's no-risk arbitrage and that you recommend it to "smart" people. The reality as I see it is in order to make a profit greater than your HELOC rate you need to take risk. It's not a no-brainer. Is it safe to say you're a financial planner or similar? I'm open to learning the details.
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#18 tommyGunZ

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Posted 20 May 2008 - 02:10 PM

While this is basically just an annoyance to me, this whole thing makes me wonder about people who maybe are struggling to make their monthly mortgage payment and have been dipping into their home equity line to cover it. If they're suddenly cut off (and the guy on the phone indicated that First Horizon had just done this to lots and lots of people), then a whole new wave of foreclosures is likely.

Yep. And Alt A loans are performing at about the same rate as subprime loans were performing in early '07 before that debacle. The Alt A resets are coming, and it's going to be ugly.This isn't over folks. Those who think we've bottomed or that we'll be back to normal shortly are mistaken. IMO, of course.

#19 tommyGunZ

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Posted 20 May 2008 - 02:39 PM

If you look past the amateurish production of this video and the cheesy "MrMortgage" moniker, and instead listen to the details and the data analysis, this is pretty frightening and paints a dark picture for CA real estate over the next couple years: ALT-A Trouble

#20 placeholder98

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Posted 20 May 2008 - 03:51 PM

Please explain further the pre-tax interest vs tax adjusted interest.

the interest on your home mortgage is tax deductible. thus you need to apply your applicable effective tax rate to the interest rate you are paying.so in this example if you are paying 5% and are in the 20% effective tax rate bracket, your post-tax interest rate is 4% (since 20% of your interest will be deductible).so in this example you're now comparing 4.00% to 3.30% (assuming your number for compounding).all of a sudden the spread has been reduced to less than a point for assured liquidity.this doesn't even take into consideration other options...however if this was the case i would gladly pay 0.70% a year for excess liquidity. however with the appropriate money management strategy you will actually end up ahead.
It's 'bout to get hectic.

#21 The_Man

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Posted 31 July 2008 - 09:38 AM

Quick update -- my original lender (First Horizon) refused to reopen my HELOC at any amount without me paying for a new appraisal.

So I just went to my bank (Bank of America) and I'm closing tomorrow on a $50k HELOC with no costs to me. Plus, now I can transfer funds electronicially between accounts which makes things much easier anyway. Get this: when I called First Horizon to get my payoff balance, they were sticking me with a $500 fee for early payoff ON AN ACCOUNT THEY SHUT DOWN MY ACCESS TO.

It was one of the few MOP moments I've had in the last 15 years. They graciously ended up waiving the fee. The other good news is that these clowns just sold my mortgage to Chase. I am glad to have them out of my life and hope they go bankrupt.

#22 stbugs

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Posted 31 July 2008 - 09:59 AM

Quick update -- my original lender (First Horizon) refused to reopen my HELOC at any amount without me paying for a new appraisal.

So I just went to my bank (Bank of America) and I'm closing tomorrow on a $50k HELOC with no costs to me. Plus, now I can transfer funds electronicially between accounts which makes things much easier anyway. Get this: when I called First Horizon to get my payoff balance, they were sticking me with a $500 fee for early payoff ON AN ACCOUNT THEY SHUT DOWN MY ACCESS TO.

It was one of the few MOP moments I've had in the last 15 years. They graciously ended up waiving the fee. The other good news is that these clowns just sold my mortgage to Chase. I am glad to have them out of my life and hope they go bankrupt.

Classic. You gotta wonder how many people that worked on or didn't notice it. If you had opened up another HELOC and closed out the shut down one with a balance by using funds from the new HELOC (think refinancing a mortgage where the new mortgage $$$ pay off the old one), then you might not have even noticed that fee. I wouldn't be surprised if they just tack it on when the new lender calls to ask for the payoff amount. Sneaky bastards.

#23 Dvorak

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Posted 31 July 2008 - 10:02 AM

Quick update -- my original lender (First Horizon) refused to reopen my HELOC at any amount without me paying for a new appraisal.

So I just went to my bank (Bank of America) and I'm closing tomorrow on a $50k HELOC with no costs to me. Plus, now I can transfer funds electronicially between accounts which makes things much easier anyway. Get this: when I called First Horizon to get my payoff balance, they were sticking me with a $500 fee for early payoff ON AN ACCOUNT THEY SHUT DOWN MY ACCESS TO.

It was one of the few MOP moments I've had in the last 15 years. They graciously ended up waiving the fee. The other good news is that these clowns just sold my mortgage to Chase. I am glad to have them out of my life and hope they go bankrupt.

Oh man, if I had been in your shoes and they even mentioned a $500 fee, my wife would have been using that $50K for bail.

Glad you got things worked out (mostly) in your favor.

#24 The_Man

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Posted 31 July 2008 - 10:21 AM


Quick update -- my original lender (First Horizon) refused to reopen my HELOC at any amount without me paying for a new appraisal.

So I just went to my bank (Bank of America) and I'm closing tomorrow on a $50k HELOC with no costs to me. Plus, now I can transfer funds electronicially between accounts which makes things much easier anyway. Get this: when I called First Horizon to get my payoff balance, they were sticking me with a $500 fee for early payoff ON AN ACCOUNT THEY SHUT DOWN MY ACCESS TO.

It was one of the few MOP moments I've had in the last 15 years. They graciously ended up waiving the fee. The other good news is that these clowns just sold my mortgage to Chase. I am glad to have them out of my life and hope they go bankrupt.

Classic. You gotta wonder how many people that worked on or didn't notice it. If you had opened up another HELOC and closed out the shut down one with a balance by using funds from the new HELOC (think refinancing a mortgage where the new mortgage $$$ pay off the old one), then you might not have even noticed that fee. I wouldn't be surprised if they just tack it on when the new lender calls to ask for the payoff amount. Sneaky bastards.

That's exactly what I think the scam is. They figure they'll stick it on there -- if someone notices, they take it off. If not, they just made $500 extra.

I'm pretty sure that my HELOC with them had NO penalty for early payment, even if they hadn't been the ones to close the account. But since they graciously waived the fee, I'm probably not going to bother digging out the original documents and go through them just to find out.

#25 Thorn

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Posted 31 July 2008 - 10:38 AM


Please explain further the pre-tax interest vs tax adjusted interest.

the interest on your home mortgage is tax deductible. thus you need to apply your applicable effective tax rate to the interest rate you are paying.so in this example if you are paying 5% and are in the 20% effective tax rate bracket, your post-tax interest rate is 4% (since 20% of your interest will be deductible).so in this example you're now comparing 4.00% to 3.30% (assuming your number for compounding).all of a sudden the spread has been reduced to less than a point for assured liquidity.this doesn't even take into consideration other options...however if this was the case i would gladly pay 0.70% a year for excess liquidity. however with the appropriate money management strategy you will actually end up ahead.

I wish to subscribe to your newsletter.If you had 100k available untapped in a equity line, how would you spread it out?
Thinking of you

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#26 The Flying Turtle

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Posted 31 July 2008 - 11:00 AM



Please explain further the pre-tax interest vs tax adjusted interest.

the interest on your home mortgage is tax deductible. thus you need to apply your applicable effective tax rate to the interest rate you are paying.so in this example if you are paying 5% and are in the 20% effective tax rate bracket, your post-tax interest rate is 4% (since 20% of your interest will be deductible).so in this example you're now comparing 4.00% to 3.30% (assuming your number for compounding).all of a sudden the spread has been reduced to less than a point for assured liquidity.this doesn't even take into consideration other options...however if this was the case i would gladly pay 0.70% a year for excess liquidity. however with the appropriate money management strategy you will actually end up ahead.

I wish to subscribe to your newsletter.If you had 100k available untapped in a equity line, how would you spread it out?

Isn't the interest on the HELOC only deductible for funds used on certain items such as remodeling? My year end statement always alludes to this.I know people write off the entire amount but I think during an audit you are required to show how the funds were used.

#27 Dragons

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Posted 31 July 2008 - 11:14 AM




Please explain further the pre-tax interest vs tax adjusted interest.

the interest on your home mortgage is tax deductible. thus you need to apply your applicable effective tax rate to the interest rate you are paying.so in this example if you are paying 5% and are in the 20% effective tax rate bracket, your post-tax interest rate is 4% (since 20% of your interest will be deductible).so in this example you're now comparing 4.00% to 3.30% (assuming your number for compounding).all of a sudden the spread has been reduced to less than a point for assured liquidity.this doesn't even take into consideration other options...however if this was the case i would gladly pay 0.70% a year for excess liquidity. however with the appropriate money management strategy you will actually end up ahead.

I wish to subscribe to your newsletter.If you had 100k available untapped in a equity line, how would you spread it out?

Isn't the interest on the HELOC only deductible for funds used on certain items such as remodeling? My year end statement always alludes to this.I know people write off the entire amount but I think during an audit you are required to show how the funds were used.

I believe the first 100k is deductible for any reason. After that, it's only deductible if it was used to upgrade your house.ETA - I'm not a tax attorney, so you should consult with one to be sure.

Edited by Dragons, 31 July 2008 - 11:14 AM.

Don't take my word for it, ask someone who is prime.

#28 The_Man

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Posted 05 August 2008 - 10:26 AM



Quick update -- my original lender (First Horizon) refused to reopen my HELOC at any amount without me paying for a new appraisal.

So I just went to my bank (Bank of America) and I'm closing tomorrow on a $50k HELOC with no costs to me. Plus, now I can transfer funds electronicially between accounts which makes things much easier anyway. Get this: when I called First Horizon to get my payoff balance, they were sticking me with a $500 fee for early payoff ON AN ACCOUNT THEY SHUT DOWN MY ACCESS TO.

It was one of the few MOP moments I've had in the last 15 years. They graciously ended up waiving the fee. The other good news is that these clowns just sold my mortgage to Chase. I am glad to have them out of my life and hope they go bankrupt.

Classic. You gotta wonder how many people that worked on or didn't notice it. If you had opened up another HELOC and closed out the shut down one with a balance by using funds from the new HELOC (think refinancing a mortgage where the new mortgage $$$ pay off the old one), then you might not have even noticed that fee. I wouldn't be surprised if they just tack it on when the new lender calls to ask for the payoff amount. Sneaky bastards.

That's exactly what I think the scam is. They figure they'll stick it on there -- if someone notices, they take it off. If not, they just made $500 extra.

I'm pretty sure that my HELOC with them had NO penalty for early payment, even if they hadn't been the ones to close the account. But since they graciously waived the fee, I'm probably not going to bother digging out the original documents and go through them just to find out.

Written loan payoff balance finally arrived at the new lender today -- with the $500 early payoff fee included in the amount. :thumbup:

The new bank can't just send a payoff minus the $500. Trying to see if they can call First Horizon and get verbal verification that the fee is waived. If not. First Horizon "assures" me that if the new lender pays them the extra $500, they'll reimburse me for it with a check. :X

First Horizon's stock price is down 77 percent since Spring 07. Good.

#29 Dragons

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Posted 05 August 2008 - 10:36 AM




Quick update -- my original lender (First Horizon) refused to reopen my HELOC at any amount without me paying for a new appraisal.

So I just went to my bank (Bank of America) and I'm closing tomorrow on a $50k HELOC with no costs to me. Plus, now I can transfer funds electronicially between accounts which makes things much easier anyway. Get this: when I called First Horizon to get my payoff balance, they were sticking me with a $500 fee for early payoff ON AN ACCOUNT THEY SHUT DOWN MY ACCESS TO.

It was one of the few MOP moments I've had in the last 15 years. They graciously ended up waiving the fee. The other good news is that these clowns just sold my mortgage to Chase. I am glad to have them out of my life and hope they go bankrupt.

Classic. You gotta wonder how many people that worked on or didn't notice it. If you had opened up another HELOC and closed out the shut down one with a balance by using funds from the new HELOC (think refinancing a mortgage where the new mortgage $$$ pay off the old one), then you might not have even noticed that fee. I wouldn't be surprised if they just tack it on when the new lender calls to ask for the payoff amount. Sneaky bastards.

That's exactly what I think the scam is. They figure they'll stick it on there -- if someone notices, they take it off. If not, they just made $500 extra.

I'm pretty sure that my HELOC with them had NO penalty for early payment, even if they hadn't been the ones to close the account. But since they graciously waived the fee, I'm probably not going to bother digging out the original documents and go through them just to find out.

Written loan payoff balance finally arrived at the new lender today -- with the $500 early payoff fee included in the amount. :X

The new bank can't just send a payoff minus the $500. Trying to see if they can call First Horizon and get verbal verification that the fee is waived. If not. First Horizon "assures" me that if the new lender pays them the extra $500, they'll reimburse me for it with a check. :hot:

First Horizon's stock price is down 77 percent since Spring 07. Good.

I highly doubt they'll take verbal verification. I would expect Banks have tightened up their paper trails since some of them have had trouble foreclosing.
Don't take my word for it, ask someone who is prime.

#30 stbugs

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Posted 05 August 2008 - 11:11 AM





Quick update -- my original lender (First Horizon) refused to reopen my HELOC at any amount without me paying for a new appraisal.

So I just went to my bank (Bank of America) and I'm closing tomorrow on a $50k HELOC with no costs to me. Plus, now I can transfer funds electronicially between accounts which makes things much easier anyway. Get this: when I called First Horizon to get my payoff balance, they were sticking me with a $500 fee for early payoff ON AN ACCOUNT THEY SHUT DOWN MY ACCESS TO.

It was one of the few MOP moments I've had in the last 15 years. They graciously ended up waiving the fee. The other good news is that these clowns just sold my mortgage to Chase. I am glad to have them out of my life and hope they go bankrupt.

Classic. You gotta wonder how many people that worked on or didn't notice it. If you had opened up another HELOC and closed out the shut down one with a balance by using funds from the new HELOC (think refinancing a mortgage where the new mortgage $$$ pay off the old one), then you might not have even noticed that fee. I wouldn't be surprised if they just tack it on when the new lender calls to ask for the payoff amount. Sneaky bastards.

That's exactly what I think the scam is. They figure they'll stick it on there -- if someone notices, they take it off. If not, they just made $500 extra.

I'm pretty sure that my HELOC with them had NO penalty for early payment, even if they hadn't been the ones to close the account. But since they graciously waived the fee, I'm probably not going to bother digging out the original documents and go through them just to find out.

Written loan payoff balance finally arrived at the new lender today -- with the $500 early payoff fee included in the amount. :thumbdown:

The new bank can't just send a payoff minus the $500. Trying to see if they can call First Horizon and get verbal verification that the fee is waived. If not. First Horizon "assures" me that if the new lender pays them the extra $500, they'll reimburse me for it with a check. :hot:

First Horizon's stock price is down 77 percent since Spring 07. Good.

I highly doubt they'll take verbal verification. I would expect Banks have tightened up their paper trails since some of them have had trouble foreclosing.

:lmao:
Agreed. I think you will have to close and hope you get the $500 back in a reasonable timeframe. I have a feeling you will, but sucks to have to jump through hoops. At least you noticed it though and have us FBGs here as support. ;) Unless they are teetering on going out of business, you should be OK.




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