But that’s nothing compared to the freeze you or your clients would experience if your Home Equity Line of Credit were to be canceled during the next housing burst!Remember being upside-down!? During the last crash in 2008, the banks canceled over 3 million Home Equity Lines of Credit as a result of the calamitous reduction in home values. For those who had acquired a bank line of credit as security against a financial downturn, they soon discovered that their home values had decreased to the point that their equity line of credit was way over the loan-to-value limit set by the bank.
As a result, the home equity lines were canceled or frozen and the funds were no longer available.
But, the FHA-insured Home Equity Conversion Mortgage Line of Credit was not, and cannot be, canceled or changed as a result of a reduction in home value.
You need to know this!
One of the best kept secrets of the home finance market is that the HECM Line of Credit, once put into place, is protected from downturns in the housing market.
Read more about it at here… You need to know about this option to prepare for a worst-case scenario.