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Message
re: Wells Fargo suspends new HELOC loans
Posted on 12/5/23 at 3:03 pm to back9Tiger
Posted on 12/5/23 at 3:03 pm to back9Tiger
quote:
Explain this like I am 5 years old. I have an outstanding balance of a HELOC (renovations), but my home is paid off. What implications would that have.
I have been out of the business for a long time, but HELOC's can usually be cancelled by the lender at any time for any reason. That means your lender can decide they want out of the HELOC business and close yours. They minimum repayment of outstanding balance will be governed by your specific contract.
0
Posted on 12/5/23 at 3:03 pm to fightin tigers
quote:
Quick google shows they suspended the HELOCs almost a year ago.
Yea first thing I checked was date of OP because WF already did this recently.
Posted on 12/5/23 at 3:04 pm to KiwiHead
quote:
If you have a HELOC, guess what? Your house ain't paid off any more.
Posted on 12/5/23 at 3:05 pm to stout
quote:
I took it as money was too cheap for too long. The cheap money allowed house prices to far outpace wage growth and now if there is a correction you will have a lot of people with negative equity that will not be able to unload their houses.
This correction (if it happens) is going to flatline a lot of 50+ folks who bought houses way to late in life.
Posted on 12/5/23 at 3:25 pm to stout
Doesn't surprise me. They also discontinued renewing loans on non-owner occupied commercial buildings. I own commercial real estate as a side gig and the loan on one of my buildings matured. I have 60% equity in the building, it has a national tenant, it operates at about a 10% cap rate based on my purchase price and I have a credit score of over 800. With Wells Fargo declining to renew, I reached out to about every bank I could think of and found only two banks willing to consider the loan. The decline from banks has nothing to do with my credentials or property, they all stated they are no longer offering commercial building loans at this time. Banks are trying to build cash deposits at this point and reducing their loan portfolios. Banks definitely are bracing themselves for it to get worse.
Posted on 12/5/23 at 3:27 pm to stout
The only reason you’d do this is if the only do in-house servicing on loans the fund. We’ve seen a huge increase in HELOC volume on both the wholesale and retail side.
Posted on 12/5/23 at 3:29 pm to stout
Concerning to say the least.
Posted on 12/5/23 at 3:29 pm to stout
quote:
Do they see a price correction on the horizon and are afraid a lot of equity is about to disappear?
I think they don’t want to get stuck with a bunch of homes they are responsible for.
Having an inventory that high means you can’t dump them all at once without tanking the market.
Posted on 12/5/23 at 3:35 pm to teke184
quote:
Having an inventory that high means you can’t dump them all at once without tanking the market.
They don't care. That is a taxpayer issue. As long as a home meets conveyance standards then FHA, VA, Fannie, etc will take the home back from Wells and reimburse WF for any cost. If HUD then sells it at a loss that is taxpayer money. No WF.
The only way WF cares is if it is a conventional loan or if the property does not meet conveyance requirements and they have to move the property to their REO department.
Posted on 12/5/23 at 3:42 pm to billjamin
quote:
In summary, what we are witnessing is the largest policy error in market history.
I would imagine that this means that homeowners who borrowed up to 80% of their LTV 1-2 years ago now owe 100-110% of the present day value and they're defaulting on their payments, so WF is royally screwed until rates fall or prices rebound.
Posted on 12/5/23 at 3:45 pm to stout
Good luck getting sub prime rates as well. I always wondered that if I sold my house and continued to use my HELOC, would the lender know bout it? 
Posted on 12/5/23 at 3:52 pm to Ramblin Wreck
Ramblin where are you located? I am a commercial lender in Louisiana. We are still lending for sure.
Posted on 12/5/23 at 3:59 pm to DownSouthJukin
The irony in that statement is a perfect example of today's financial situation
Posted on 12/5/23 at 4:03 pm to bad93ex
quote:
will this stop people from flipping houses or will the housing market alone keep that from happening?
Straight up flips are done.
If you renovate you're adding value.
Posted on 12/5/23 at 4:27 pm to soupboy10
quote:
Ramblin where are you located? I am a commercial lender in Louisiana. We are still lending for sure
Thanks for offering, but I am already in the process of renewing with one of the banks I found.
Posted on 12/5/23 at 4:39 pm to back9Tiger
quote:
Explain this like I am 5 years old. I have an outstanding balance of a HELOC (renovations), but my home is paid off. What implications would that have.
You’ll likely have to pay off the HELOC balance in one lump sum or they’ll take your house as payment
Posted on 12/5/23 at 5:11 pm to deltaland
HELOCs are typically adjustable at Prime + a margin..I have one that has no balance but would cost me 11.5% to draw on...had a teaser rate of 1% for 6 months when I used it
WFC probably seeing people draw on lines and becoming delinquent...was a huge issue in 2008-2010
WFC probably seeing people draw on lines and becoming delinquent...was a huge issue in 2008-2010
Posted on 12/5/23 at 6:04 pm to stout
Prices falling will increase people bailing on their mortgages, that is when the buying opportunities start. It's going to suck for a lot of people, but the shittiest of them are just going to walk away and let the bank have their house. Banks have given some DUMB loans, and .gov will bail them out, the people who will lose out are not even involved in the mess.
Posted on 12/5/23 at 6:17 pm to SlowFlowPro
quote:
Reminds me of my thread from a few days ago. I guess CC companies are about to get pissed that they can't rely on HELOCs anymore
Makes sense with how ridiculous national credit card debts and interest rates are. That’s a bad situation to be in if you’re getting a loan against your house to pay off some credit cards…
Posted on 12/5/23 at 6:21 pm to stout
The economy is in a massive bubble that is about to pop but the globalists desperately need to get through the next election.
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