Freeze in the Middle of Summer

Freeze in the Middle of Summer

May 25, 2010 | Barbara's Blog

It’s been cold out there this summer and investors have been frozen out of the market. That right, lenders have been giving real estate investors the cold shoulder. The fear that gripped the banking industry two years ago has begun to thaw a little but now instead of sub-zero the thermometer is reading just around freezing. Many lending problems have hit the real estate investor community. From the loss of Stated Income loans to only being aloud to have up to four financed properties, the investor has been frozen in place.

Now, just as the S&P | Case Shiller report shows some economic improvement in the housing market a new storm is arising. As many of us begin to gain the ability to actually refinance our loans into lower interest rates, we are experiencing a new problem. The most recent problem to hit many real estate investors is a freeze of their open credit lines or a lowering of the line to the current outstanding balance. Many times the banks actions appear to be for no other reason than to limit their exposure to the overall market and often have nothing to do with the borrower’s credit score or home value.

A Thaw in the Coming Winter The good news is this problem is being noticed by the government and some actions are being taken to slow the lending industries ability to continue freezing us out of opportunity. While the government actions are weak right now, the fact that they acknowledge the problem exists is huge in the long run. Anybody that has had an equity line frozen, reduced or closed can take action. The Federal Reserve Board has even posted an acknowledgement of the problem in a pamphlet online. Read about consumer rights and to understand the rudimentary steps people can take to force the bank to reinstate an equity line. The fact that the Fed saw the need to at least acknowledge the problem means that someone is working on it.

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