I think your third point kind of supports the idea that banks are concerned about future property values. HELOCs are typically junior liens, and in the case of

I think your third point kind of supports the idea that banks are concerned about future property values. HELOCs are typically junior liens, and in the case of a property that loses its equity, essentially unsecured debt. If they aren’t concerned about property values decreasing, then presumably they would be confident they’d recuperate the lended amount through the foreclosure. If the property is underwater that is unlikely to be the case.