Jun 11, 2008 4:28 pm US/Pacific
Call Kurtis: Equity Line Reduced
Home Equity Line Takes Drastic Drop
SACRAMENTO (CBS13) ―
Wanda and Bill Schmidt bought their home in Cameron Park in 2000 for $395,000.00. "We love the weather, we love the area, and for us it was an ideal fit."
The Schmidt's bank with Washington Mutual and refinanced their home in November of 2006. At the time their home was appraised at $680,000, and WAMU made them another offer. They told the Schmidt's, "since you're reifying lets take a look at your line of credit and they upped the line". WAMU increased the line to $151,000.
The Schmidt's had a balance of $55,000 until October when they decided to take $10,000 out of their retirement fund to pay their line down. Just a few months later, in April, they got a letter; "Saying that they've re-evaluated the value of the home and that they were reducing our credit line essentially 69%". The Schmidt's credit line was lowered to $47,300, just $2000 more than what they owed. "I mean if we had known obviously we would have kept the cash in the bank, we would not have paid that down."
The Schmidt's were shocked. They'd been customers for over 20 years with WAMU. So they immediately called the bank. "The explanation was that values had decreased in the area." The Schmidt's understand values have dropped, but not 69%? Bill was told in order for them to reconsider they'd have to pay for a re-appraisal out of his own pocket. Frustrated, they contacted us. "It just upsets me that I have to go through all of this, you know, to get back what I had before."
We contacted WAMU who initially sent this response. " WAMU has had programs in place for years to actively manage the amount of credit extended…We believe this is part of being a responsible lender." "The bottom line is that they're in business to make money and you're just a number."
We got WAMU to agree to reconsider the Schmidt's case. WAMU will pay for a current appraisal of the home, and if the value is $600,000, they will fully re-instate the Schmidt's line of credit. "I can tell you that our house has certainly declined in value as well as everyone else's house. But 69%, I don't think so."
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