In a bind, WaMu squeezes HELOC borrowers

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I reported back in December that Washington Mutual had confirmed it was lowering the amount of some home equity lines of credit, or HELOCs. Judging from my e-mail in-box, WaMu is continuing to squeeze its customers.

This came in tonight: ‘I just received the notice today of the reduction on our HELOC from WaMu ... As a customer I can verify that the amount they lowered it to is much less than the amount we currently have as a balance. On 4/2/08 our balance was $69,778.47. Today, 4/9/08, we received notice via mail that our limit was to be lowered to $64,900. In addition to this change, which I should mention the letter was written on 4/3/08, the bank charged us an overlimit fee on 4/4/08.’

Last week a Realtor in San Diego wrote, ‘Just after I made a large payment of $10K (only $350 payment was due), they took away all of my credit line. This is putting me in a panic and possible bad situation. I have been with WaMu for many years and have had many home loans with them, and never missed a payment, and have always had bank accounts with them, in addition, my credit is great. I had no notice or warning whatsoever, of course if I had, I would not have given them $10,000 that I did not need to.’

More: ‘I am a Realtor, and times are tough, and it helped knowing that I had that cushion, making it a little easier to justify spending money on marketing and advertising in an effort to keep business coming in and thus enabling me to meet my payment obligations.’

This is a significant trend in the economy right now: it is hard for lots of people to borrow money. Cal mentions this often in the comment section. The Fed can cut interest rates ‘til the cows come home, it doesn’t matter, it’s still hard to borrow.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.