bentleyWIRE | blogged

    As some of you may be aware, many lenders are actually freezing access to HELOCs.  A bankrate.com article written by Leslie Geary explains it well.  In essence, lenders have had a brutally rough time managing their balance sheets and this is one strategy to shore them up. In addition, with homes depreciating in many areas, they are being proactive in preventing homeowners from getting underwater on their home equity.  Our sources state that all the major lenders are either considering this or are already rolling out the freezes.  You should be especially concerned if your home lies within an area of declining home values and/or your Combined Loan-To-Value equals 90% or more based on current market value.

    If you know that you will need access to these funds within the next 1 or 2 yrs, then and only then is Bentley advising our clients to pull cash out now to ensure access to funds.  We're suggesting funds be placed in a high-yield savings acct offering an APY > 3.00%.  As of this writing, WAMU, Countrywide and E*Trade were all offering rates above 3.00%.  In my opinion, the wisest thing to do would be to payoff higher cost debt such as credit card balances.  Just be sure that you're able to access these funds via convenience check if need be w/out massive fees AND that you have the discipline to NOT max out your credit cards.  Doing so would negate the whole purpose of funds accessability.