Although there are signs of thawing in the commercial credit market, consumers facing high unemployment and falling home values are still in need of information on their personal credit. Recently, the Federal Reserve Board of Governors released their "5 Tips for dealing with a Home Equity Line Freeze or Reduction" which illustrates a consumer's rights and a lender's responsibility when a home equity line of credit is frozen. The five tips suggest that you: 1. Read the notice your lender sends you. A consumer must be notified in writing of a freeze or reduction in your home equity line of credit no later than three days after your home equity line is frozen. 2. Call your lender. Even if your credit is good, your home equity line of credit can be reduced or frozen especially if your house value has fallen. 3. Learn why your lender froze or reduced your home equity line of credit. The Federal Reserve points out that the most comon reasons for freezing a consumer's line of credit include a decrease in the value of the consumer's house or changes in the consumer's financial circumstances. 4. Ask your lender how to have your home equity loan reinstated. Credit privileges must be reinstated, according to the Federal Reserve, when the circumstances creating the freeze or reduction, no longer exist. The Federal Reserve advises that you put your request for reinstatement in writing. 5. Remember that the lender can impose fees for reinstating your home equity line of credit. While your lender can assess you a fee to cover the cost of an appraisal and credit report when determining whether to increase your home equity line of credit, the lender cannot assess you a fee for reinstating your home equity line of credit
Federal Reserve releases advice on frozen home equity lines of credit
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