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Home Equity Credit Line (HELOC) Freeze: How Can It Affect Home Owners

Published
by
admin
on July 2, 2008
in Credit Card News
. 0 Comments

What is a HELOC?

HELOC stands for Home Equity Line of Credit. A HELOC works similarly to a secured credit card, but instead of depositing money to the lender, your home equity will serve as the security for the loan. If your HELOC application is approved, you’ll be given a credit limit at closing based on the value of your home. You can borrow money within your credit limit as you need it and you’ll pay only what you’ve borrowed so far.

What is a HELOC Freeze?

Now what about a Home Equity Line of Credit freeze? With the misfortune that has happened in the real estate industry recently, lenders are forced to modulate and even freeze some of these HELOCs. In fact, lenders are now even more cautious about issuing HELOCs to home owners than before. Moreover, major banks in North America have already frozen most of their HELOCs.

A frozen HELOC would mean that you cannot borrow further the remainder of the amount that was previously determined as your credit limit minus what you’ve already borrowed. It means that this fund is no longer accessible for you to borrow. This is done by lenders to protect them from the plummeting house value as experienced in today’s slump in the housing market.

Now the real question is how does a frozen HELOC affects home owners? A frozen HELOC means that the holder needs to decide whether he still needs the funds from his HELOC available to him or her. If the borrower knows that she needs the money available to her, she may need to borrow all the available funds now and just pay the interest she’ll incur. In the meantime that she doesn’t use the money, she can put it into some account or short-term investment that earns interest. That may be able to partially offset the interest charge by the lender for the HELOC.

Some banks don’t freeze their HELOCs entirely but instead lower the initial credit limit that they had given to the home owner. In any case, whether the HELOC is frozen or lowered, the home owners should think of ways to make the money available to them when they need it. They might also need to change their spending pattern or postpone some major plans that need substantial amount of money if their HELOCs are frozen or lowered.

Firstcard.com Interviews a Secret Service Agent About Preventing Identity Theft

Published
by
admin
on April 3, 2008
in Security
. 0 Comments

Your wallet is gone, your social security number’s been pulled from an online application, your phone number was picked up by a bystander while you were in line at the airport. There are thousands of ways that “Susie Smith” becomes “Susie Smith” all over again; criminals opening credit accounts, stealing from bank accounts, circumventing payments and more, and it can be stopped, you can be prepared.

Firstcard.com interviewed a United States Secret Service agent to get the answers to the most popular questions regarding this important issue. (For security purposes, the Secret Service Agent’s identity has not been disclosed)

FIRSTCARD.COM: Is identity theft as rampant as we hear?

A: With 15 million victims, a new case every two to three seconds, reported in 2006, identity theft is the fastest growing crime in the United States.

FIRSTCARD.COM: What is identity theft?
A: Identity theft ranges from one time usage of a credit card that isn’t the perpetrators, to opening accounts for credit cards, utilities, and health services. Eighty-five percent of the victims find out about their problem after receiving a bill with questionable charges.

FIRSTCARD.COM: What does it take to clear one’s name?
A: Once you are “in the system” it’s a long road to get out. Victims report months and years of repair work to their name and credit history which includes filing police reports, identity theft affadavits, and working with each the three major credit bureaus, as well as all credit and banking institutions of association.

FIRSTCARD.COM: How do the perpetrators get the information they need?
A: The instances of identity theft have increased hundreds-fold in the last few years, with more and more business and purchasing beyond done online, and even with personal information that is given over the phone. Phishing scams, which unfortunately too many people still fall for, are a leading source of information. Emails and phone calls from “officials,” suggesting that you’ve won a prize, tax refunds that await you, that you’re interest rates will be lowered, that a bank account in your name has been found, and so many other “stories,” are just not true. If it’s “official,” you’ll get a letter in the mail and even then, suspicious is the first thing you ought to be. So many times, more often than not, this is how information is passed on.

FIRSTCARD.COM: How to prevent identity theft?
A: Use a shredder! Don’t just rip your bills or credit card offers in half – shred them. As there are many cases of mail theft, we also highly recommended that people bring in their mail as soon as possible each day.

FIRSTCARD.COM: What is the government doing about this problem?
A: Law enforcement agencies, at every level; local, state and federal, are investigating the issues however, unfortunately, more criminals get away than are caught. Of course this is of high priority and it’s something we are working toward every day.