Home Equity Loans/USAA Savings Bank

[friar1610]

I am thinking of relocating and have been looking at various options for financing a new house for an interim period in the event my current house doesn't sell prior to closing on the new one. (I own my current house outright; I plan to own a new one outright once this one sells.)

In reviewing the USAA Savings Bank web site, I see quite a few angry posts from the 2009-2011 time frame when USAA zeroed out a lot of lines of credit. According to most of the posts, the revaluation of home values was done arbitrarily (without benefit of an appraisal) and with no advance notice. Of course, I understand that when home values drop and the line of credit is premised on the percentage of a certain value, the line of credit must also drop. But zeroing them out seems drastic.

Does anyone know if other banks did the same thing during the worst of the housing crisis? I'd certainly like to go with a bank/credit union that won't do this sort of thing. Imagine thinking that you had $X in credit and planning to use that to purchase a new house only to have it zeroed out a day or two before closing!

In particular, if anyone has any experience with NFCU or PenFed on HELOCs I'd appreciate your insights.

 

[ziggy29]

In reviewing the USAA Savings Bank web site, I see quite a few angry posts from the 2009-2011 time frame when USAA zeroed out a lot of lines of credit. According to most of the posts, the revaluation of home values was done arbitrarily (without benefit of an appraisal) and with no advance notice. Of course, I understand that when home values drop and the line of credit is premised on the percentage of a certain value, the line of credit must also drop. But zeroing them out seems drastic.

This was a very common practice in the aftermath of the popping of the housing bubble. There may be some institutions that didn't do it, but I do think most of them reduced or zeroed out the remaining credit lines for at least some accounts. USAA was definitely not doing something unusual.

 

[rodi]

My understanding is the accounts that were zeroed out were largely done because there was zero equity left after the first trust deed... I live in CA so a lot of my neighbors had primary loans of 80% or more of the purchase price - and HELOCS on top of that. When the home prices dropped 30% or more - the HELOC was entirely underwater...

 

[Nords]

In reviewing the USAA Savings Bank web site, I see quite a few angry posts from the 2009-2011 time frame when USAA zeroed out a lot of lines of credit. According to most of the posts, the revaluation of home values was done arbitrarily (without benefit of an appraisal) and with no advance notice. Of course, I understand that when home values drop and the line of credit is premised on the percentage of a certain value, the line of credit must also drop. But zeroing them out seems drastic.

It was extremely common back then. I even heard of a couple cases of lenders demanding that borrowers start paying back their balances, just as if the draw period of the HELOC had been terminated.

Fidelity had a mortgage-lending program that was based on the margin in a brokerage account. The margin calls completely wiped out that program and Fidelity quickly exited that business line.

In particular, if anyone has any experience with NFCU or PenFed on HELOCs I'd appreciate your insights.

We've had them with both. No significant issues.

I've been a pretty harsh critic of PenFed lately but we've never had a problem with their HELOCs.

During our last refinancing of our home mortgage (a PenFed-produced disaster), we needed to resubordinate our NFCU HELOC. NFCU wanted something like $250 in closing costs and basically wanted to start the application process all over again. In their defense, this was just a couple years ago when lenders were still gunshy.

So after the PenFed refi we used our closing paperwork to apply for a PenFed HELOC. It's relatively small but it's more than enough to serve as a "quick cash" fund for a home repair or a replacement vehicle.

I think you'd do well with USAA, NFCU, or PenFed's HELOCs, in that order of quality of service. But you'd probably want to start with the one offering the lowest rate or the longest draw.

 

[Khufu]

I am thinking of relocating and have been looking at various options for financing a new house for an interim period in the event my current house doesn't sell prior to closing on the new one. (I own my current house outright; I plan to own a new one outright once this one sells.)

Why on earth would you buy the new house before you've sold the old one? If you're paying cash for the next house you should be able to close very quickly.

 

[friar1610]

Why on earth would you buy the new house before you've sold the old one? If you're paying cash for the next house you should be able to close very quickly.

Well, there could be a case where I want a specific new house and I'd like to make sure I get it before someone else buys it out from underneath me. If I wait until the old one sells, that could be a problem.