The Federal Reserve Board has published a new guide titled, “5 Tips for Dealing with a Home Equity Line Freeze or Reduction,” that explains consumers' rights and lenders' responsibilities when credit lines are reduced and provides information for those seeking to have a credit line reinstated.
The Federal Reserve’s latest "5 Tips" guide explains that lenders can lawfully reduce or limit a consumer's line of credit regardless of whether the consumer has made timely payments. However, the lender must send a written notice of the action no later than three business days after the freeze or reduction goes into effect. The notice must include information about any other changes to the home equity line of credit (HELOC). The freeze or reduction notice should also include specific reasons for the action.
Consumers are urged to protect their credit history by acting responsibly and contacting the lender immediately if they have questions or concerns about a credit line freeze or reduction. Lenders must reinstate credit privileges when the conditions causing the freeze or reduction no longer exist.
See press release for full details.
5 Tips for Dealing with a Home Equity Line Freeze or Reduction