The 2nd Financial Crisis Of The 21st Century Begins! Chase And Wells Fargo Stop Originations Of HELOCs.
Two of the largest banks in the US have announced they will terminate all originations of HELOCs until further notice. HELOCs are also known as Home Equity Lines of Credit.
Wells Fargo Spokesperson Tom Goyda said the change went into effect last Friday. Goyda said Wells Fargo is making the change due to uncertainty in the economy.
Wells Fargo’s decision will not impact the bank’s existing HELOC customers. Borrowers with existing HELOCs will be able to draw funds on those lines of credit.
Wells Fargo’s move comes several weeks after Chase made a similar decision.
Both banks have cited market conditions as a reason in their HELOC decision.
Amy Bonitatibus, Chief Marketing Officer for Chase Home Lending told the media:
Chase’s HELOC decision came after the bank raised its lending standards. Chase announced new guidelines requiring nearly all purchase mortgage borrowers to put 20% down. They must also have a 700 FICO score.
Wells Fargo also raised some of its lending standards in April. Wells Fargo also stopped purchasing non-conforming mortgages from correspondent sellers. The bank also scaled back retail originations.