Hundreds of homeowners are challenging several banks' decisions to freeze their equity lines, preventing the borrowers from pulling out any more cash from their homes as the real estate market -- and the overall economy -- continue to sag.
This year, banks have suspended thousands of home equity loans out of fear that borrowers could end up owing more on their loans than the home is worth because of falling home prices or deteriorating credit scores. Those decisions have elicited hundreds of appeals over the last few weeks from homeowners who say their homes have not lost enough value to warrant the action.
But while some say the appeal process has been a struggle, others -- who have made requests other than appealing the freeze -- say lenders have been helpful.
One of those borrowers is Lisa Birney, who lives in Oceanside near the Vista border. She says calls to appeal the decision to Countrywide Home Loans, her lender, have yielded few results.
"It was very upsetting," she said. "I felt like I was being lied to, but in retrospect, the people I talked to probably just didn't have a clue."
Some local homeowners say they have submitted requested information to Countrywide and have waited for weeks on a decision.
But Jumana Bauwens, a Countrywide spokeswoman, said homeowners should receive a response within 48 hours after supplying the lenders with all the necessary information. She said hundreds of equity lines out of the 122,000 freezes have been reopened but declined to offer a specific number.
Bauwens said Countrywide would not comment on Birney's case because of privacy concerns.
For many owners, she said, the appeal requires an appraisal. The local homeowners who have waited weeks for a decision said they have not paid for appraisals.
"It's a Catch-22. I feel like I'm screwed no matter what I do," Birney said. "It's not fair to me as a consumer. I already paid for an appraisal less than six months ago (to secure the equity line)."
She said she is confident her home has enough equity because she had a recent appraisal and has not missed a payment.
Representatives with other lenders also said their customers could receive a response within 48 hours.
And a Wells Fargo spokesman said an appraisal might not be necessary for appealing some of its freezes since not all came from falling property values.
"It's the economy," said Jay Lawrence, a Wells Fargo spokesman. "If they think we've made an incorrect decision, we want them to call and appeal, but house depreciation is just one of the factors. ... There's job losses in certain areas. You pick up the paper every day and there's all kinds of economic conditions that can affect an individual borrower."
A spokesman with JPMorgan Chase said the bank is working with homeowners on a case-by-case basis so he could not provide specifics on how long a decision takes or what is required for an appeal.
Home equity lines of credit are loans that use the home as collateral and allow homeowners to borrow up to a maximum amount. The freeze prevents homeowners from borrowing from that line, even if they are well below the maximum.
Another Countrywide customer, Patti Lien of Menifee, said the lender has been responsive to her requests since the Calabasas-based bank froze her equity loan.
Lien said the lender promised that two equity loan checks that she had already written would clear. She said she is waiting on an appraisal before deciding whether to appeal the freeze.
"On the one hand, I want our home appraised lower so our (property) taxes are lower," she said. "But, we also want it to retain a lot of value so we still have some equity."
Though Lien said she was satisfied with Countrywide's customer service, Birney said she felt the bank's representatives offered her no help.
"I tried going up the ladder and they're all reading the same script," she said. "I don't feel like they're offering any kind of customer service."
Scripted responses were likely the case the first time she called, Bauwens said. After the initial call, Bauwens said customers should receive personalized responses to complaints about their equity line suspensions.
Bank of America froze the credit line of Dan Holbrook, a Fallbrook resident. He said he is not appealing the decision but looked to recoup a $50,000 payment to the balance of his credit line. Four days later, the bank froze the loan. He said he often pays in lump sums because of the nature of his job in real estate.
He said the lender complied, returning his payment. He added that many homeowners appealing the freezes might be unrealistic about the real property value.
"Two-thirds of Americans say their property hasn't lost value, but the truth is three-quarters of us have," Holbrook said. "This is a difficult time for everybody but the truth is, it's everyone for themselves. The homeowner has to look after their interest and the bank is looking after their own."
Justin Sheftell, director of sales for Courtesy Mortgage Co. in San Diego, said some of his customers have lost their equity lines to lender suspensions and have little opportunity to appeal.
"My general advice is to grin and bear it," he said. "I think, personally, what it will come down to is how good your relationship is with the bank. It's old-fashioned banking. If you know the customer well and you can trust them, you're more likely to open the equity line."
-- Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com.
By: ZACH FOX - Staff Writer
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