3 ms·
I think it is a big deal for a major bank to state that they are ceasing ALL HELOC origination. That's a gigantic statement of their future expectations on home
by ttul 7y ago
I think it is a big deal for a major bank to state that they are ceasing ALL HELOC origination. That's a gigantic statement of their future expectations on home values. You have to believe that their perception of risk is extreme right now in order for them to make such a move. HELOC lending is profitable: they are giving up profits because they worry about being wiped out.
- loeg 7y agoThe difficulty with things like credit scores is that they are a trailing measure; all consumers are suddenly a much bigger risk than they were in January, even if they've still got a great credit score (based on history). WF is probably concerned that they can't appropriately price the risk, or that the price they'd be comfortable with would be too high to bother (for publicity, for actual business volume, or some other regulatory limit on absolute interest rates).
- ghaff 7y agoObviously a fall in home prices would exacerbate things but, yeah, the main issue would seem to be that there are probably a whole bunch of people with solid credit worthiness in December (and who are still employed) rushing out to get HELOCs so that they have a cushion if things go south. Which is rational behavior for a lot of people given their likelihood of, say, having a job in a couple months time is also less than it was in December.
- xkqd 6y agoI'm a bit late in reading and responding to this, but do you reckon the average person is aware that they can acquire a HELOC as a technique to whether a hypothetical financial storm?