The Puget Sound Business Journal reported Friday on some more news from WaMu that is likely to affect local homeowners.
Washington Mutual Inc. has slashed or suspended $6 billion in available home equity credit to its customers in an effort to reduce its risk in a flailing housing market.
If they haven’t already been notified, WaMu’s customers across the country will learn of the change to their credit availability in a letter mailed to them in the next several days. The bank declined to disclose how many customers will be affected.
If a borrower’s home has depreciated — regardless of credit history — the line of credit will likely be reduced because the equity has fallen.
…
The Seattle-based thrift reported $1.1 billion in bad home equity loans and lines of credit in the first quarter, up 35 percent from the same time the previous year, according to a recent regulatory filing. The company saw a total of $9.2 billion in nonperforming assets for the quarter, or about 2.9 percent of its total assets. Nonperforming assets are a measure of bad loans.
Good. Making it super-easy to borrow from one’s home equity essentially eliminates one of the primary advantages of buying a home. A home “owner” that is simply building debt instead of building equity is actually worse off than the so-called bitter renters in my opinion.
Elsewhere on the home financing front, the P-I ran a syndicated column this weekend that contends that although rates on the new conforming-jumbo loans have dropped down close to conforming loans, they’re still pretty hard to get.
Higher loan limits, set early this year by the federal government as part of an economic stimulus package, were supposed to make jumbo loans more affordable in expensive housing markets. Rates finally have come down on these so-called jumbo conforming mortgages, though these loans likely will remain hard for most borrowers to get.
Unfortunately the article doesn’t really go into detail about why the loans are still hard to get, but I suspect it’s for all the reasons I laid out back in March.
(Journal Staff, Puget Sound Business Journal, 05.16.2008)
(Holden Lewis, Bankrate.com, 05.16.2008)