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Paul Kiesel
Paul Kiesel
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Countrywide Takes Away Home-Equity Credit Lines

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Countrywide is freezing the home-equity credit lines of almost all its Las Vegas customers and will proceed in doing the same to its customers in the Chicago and Los Angeles markets, which both cities have been hammered by the subprime mortgage crunch.

This news comes after Bank of America announced yesterday that it was planning on ending its bid to acquire Countrywide; both companies posted greater losses than expected for the first quarter of this year.

Bank of America, IndyMac and Washington Mutual is also following Countrywide’s lead and is suspending over 600,000 equity credit lines nationwide.

According to Bloomberg News:

U.S. lenders had $1.1 trillion in home equity loans outstanding as of last year, up 89 percent since 2003, based on the Federal Reserve’s Flow of Funds data.

Amid flashing neon signs along the Vegas Strip, residents are losing access to credit that might have financed businesses or bought cars and other goods.

As many as 15,000 people in Las Vegas, or 5 percent of the total homeowner population, had credit lines suspended by Countrywide and other lenders, said Brad Henderson, president of Henderson, Nevada-based mortgage banker and broker Evofi One.

Jerry Tao, a part-time lawyer and spokesman for Evofi One’s parent company, lost access to his $50,000 Countrywide line despite earning more than $500,000 last year and having a credit score he says was between 750 and 770.

In other mortgage news, UBS will be laying off 5500 employees and Freddie Mac and Fannie Mae might need a Bear Stearns bailout if their numbers continue to trend on a precipitous declivity. More details to come in my next blog.