Financial institutions have been tightening up on lending in recent weeks due to the COVID-19 pandemic, and home equity lines of credit have become the most recent target. JPMorgan Chase and Wells Fargo are the latest bank giants to announce that they will no longer be accepting applications for new HELOCs.
“The decision to temporarily suspend the origination of new HELOCs reflects careful consideration of current market conditions and uncertainty around the timing and scope of the anticipated economic recovery,” Tom Goyda, a Wells Fargo spokesperson, said in a statement.
The change does not impact the bank’s existing home equity customers. Borrowers with existing HELOCs will be able to continue to draw funds. JPMorgan Chase made a similar announcement.
Wells Fargo follows on the heels of Chase in announcing a temporary halt to HELOCs due to “economic uncertainty.” JPMorgan Chase, the nation’s largest lender by assets, also announced last month that it was raising its lending standards for home buyers applying for a mortgage, requiring nearly all borrowers to have at least 20% down and a 700 FICO score.
Read more: NAR Calls for Servicing Relief as Banks Tighten Mortgages
Source: “Wells Fargo Joins Chase in Halting HELOCS,” HousingWire (May 1, 2020)
