We had a post on home equity lines of credit, or HELOCs, earlier this week, courtesy of Larry Roberts, the blogger at Irvinehousingblog.com and author of the book, The great housing bubble: Why did house prices fall? He researched several Huntington Beach addresses to see how often homes were refinanced and lines of credit were taken out, back when the living was easy.
Boy, have times ever changed. 
Now, Roberts says:
“HELOCs are very hard to get, and many lenders are closing people’s HELOCs without their permission. Lenders are cutting back for two reasons: (1) they have a depleted capital base, so closing unused HELOCs allows them to loan to someone else, and (2) lenders know that people who become unemployed completely tap out all of their credit lines before declaring bankruptcy, so they are cutting back credit lines in order to protect themselves.
“I recently saw that default losses on HELOCs are running at 95%; in other words, when people default on a HELOC, the bank experiences a near total loss. Under such circumstances, banks are wisely pulling back on HELOCs.
“There will always be someone somewhere that qualifies for a HELOC. If the CLTV on the property is very low so the bank knows they will get their money back, they will extend the loan. Before the price drop, lenders were giving out HELOCs to anyone and relying on dubious appraisals. They are not doing that anymore.”
Roberts has compiled a list of homes currently for sale in Huntington Beach with listing prices over $1,000,000 that have debt in excess of their purchase price. To see his post, CLICK here.
Most US houseowners still disconnected from reality, especially the HELOC abusers! HELOC abusers are nothing but common theives!
Everyone that lied about their income on their house loan should have that fact placed on their credit report for 20 years!
I could NOT agreed more, you got it
And it don’t stop were you are mentioning it goes further, I know people who did that “Line of Credit” and now they are saying…[ i'm glad I took the money out]
And on top of that they are applying for modifications, Now if that is NOT an abuse, Please somebody explain me.
GREED, GREED, GREED.
The homeowners are disconnected with the help of the real estate.
Everyday I see same listing-Prices in parts of OC specially at the coastal-areas.
seems like they belong to another planet, Besides they no pay property-tax as they should do. Many are in arrears for years.
And many are realtors as well.
decline in prices average a 2% montly.
I live in Laguna Niguel, and my condo went down from the pick 500’s to 300’s
and I don’t care I still have a good equity, because I didn’t fall for funny loans.