I’ve gotten no less than 4 calls in the last week from friends and clients asking why their lender has notified them that their home equity line of credit has been “frozen”. In other words, it no longer is available to the borrower. Ouch!  

Freezing home equity loans in areas of declining property values makes sense. Why would a lender loan on a property where the equity has shrunk or disappeared altogether? That’s understandable. However, Marin County is not yet designated as having declining property values. That’s not to say it won’t happen, just that it hasn’t yet happened. Lenders use sales and price statistics to determine whether a county is “in decline” and from the lenders and appraisers I’ve spoken with Marin prices are, generally speaking, still stable.

If you have an equity line that you think you’ll use in the future my advice is to take the money now. Deposit it in a CD or somewhere you can get 3-4% return. If you’re paying 6% for the home equity loan it might be worth the 2-3% cost to keep those funds available to you.

If your equity line has already been frozen it might make sense to talk to a mortgage broker  about a getting a 2nd loan on your home for the amount you want.