Thanks for the replies so far. Very helpful. I have the HELOC agreement in front of me.
REFUSING TO MAKE LOANS. REDUCING YOUR CREDIT LIMIT. Lender may refuse to make a loan, or may reduce your Credit Limit, if:
(Here are my select items which aren’t obvious such as being in Default or Property Value is greatly reduced by government action.)
[li]The value of the Property declines significantly below its original appraised value.[/li][li]Lender reasonably believes you will not be able to make all your payments on time because your financial circumstances of changed materially.[/li][li]A federal regulator notifies lender that it would be unsafe or unsound to make a loan under your account.[/li][li]The Annual Percentage Rate exceeds the maximum legal rate.[/li][li]The Lender has reviewed the loan agreement and required loan disclosures and determined that the documents are incomplete or are not executed as required to create a valid, enforceable lien.[/li][li]Lender is limited by government action from imposing a Finance Charge at the Annual Percentage Rate.[/li]Another section:
CHANGE IN TERMS. Lender can change the terms of this agreement with 15 days notice if:
[li]The change will benefit you during the whole future time this agreement is in effect; or[/li][li]The change is an insignificant change in terms.[/li]Lender may determine whether a change meets one of those requirements.
#1 I believe would only occur after some serious damage has taken place in the real estate market. This risk I would consider with this property to be extremely low for it to be “under water”, due to the fact this property was purchase long before any real estate bubble.
#2 This I find alarming to read. Because on their website they want you to contact them if you have problems making your payments, but this to me signals a serious problem to them which would cause them to invoke #2 here. Meaning they wouldn’t know I lost my job unless I called and told them. Where if I lost my job, and immediately wrote a HELOC check to place in my regular checking account this wouldn’t get their attention, but if I called up and said “I was downsized…”, it just seems better not to tell them this. I’d think I would list the home for sale before I’d tell them I lost my job.
#3 I have no idea what this means at all and can’t picture a scenario in which a federal regulator would be involved. But I should admit I’m not sure what would be considered a federal regulator, could this mean, I could owe a ton of money to the IRS, so they drop a dime on me and tell them I’m a bum and to mess with my HELOC?
#4 This has pretty low risk, unless the prime rate (which is what this loan interest rate is based on) goes totally wild.
#5 This sounds like something that would address the initial processing of the loan, not after it has existed for years. Or am I mistaken?
#6 I guess this is related to #4.
#7 I did have an interest rate lowered on a HELOC years ago without my interaction of it at all. They sent me a letter one day saying they were lowering my interest rate. I called and was told they were doing this to stay competitive.
#8 Not that I am going to be overly concerned about a few cents either way, but what might be insignificant to them, could it become significant to me?
The above are my selected highlights from a six page document on this HELOC. I have discussed those which concern me most.
It doesn’t say they could reduce the credit limit or cancel the account for non-use. But I suppose they could perhaps use something from the above to claim it is a concern for them and are taking an action which results in that.
Anything else I am overlooking here that could screw up a HELOC which is being depended on as an emergency rainy day fund? By the way, I don’t consider taking long vacation trip or a new car an emergency.