A quick review of my current financial situation: Same job, higher income, a perfect payment record, and a better FICO score (800+) than when the loan was originally approved.
From the guidelines issued by the Office Of Thrift Supervision (OTS):
TERMINATING, REDUCING, OR SUSPENDING A HELOC: LEGAL RISKS
Truth in Lending Act (TILA) / Regulation Z
With some exceptions, Regulation Z prohibits a creditor from changing any term of a HELOC account. Notably, however, a creditor may prohibit additional extensions of credit or reduce the credit limit during certain periods, as long as any reduction in a borrower’s credit limit below the outstanding balance does not require the borrower to make a higher payment. Consistent with Regulation Z, creditors may freeze or reduce a HELOC account when:
The creditor reasonably believes that the consumer will be unable to make payments as agreed because of a material change in the consumer’s financial circumstances. It is important to recognize that this exception requires both a material change in a borrower’s financial situation and the creditor’s reasonable belief that the borrower will not be able to repay the HELOC account as agreed.
So why has Chase/Wamu frozen this line of credit? Since my income is higher than when I obtained this HELOC, and my documented income is higher than that which I declared on this Stated Income / Verified Asset Loan (SI/VA) loan, it can’t be because “your income is significantly less than the income information provided when you applied for your credit line”.
Could it be that Chase/Wamu’s decision “was based on whole or in part on information obtained in a report from the consumer reporting agency [TransUnion].”? Let me take a look at my FICO score conveniently reported by the Chase/Wamu Website by TransUnion.
Wow – my credit score is excellent and unchanged – from their own website! It appears that Chase/Wamu has no actual evidence to support the Regulation Z’s requirement of a “material change in a borrower’s financial situation”.
Could it be that they just made this all up to close an under-used line of credit? Looks like I’ll also be filing a Regulation Z violation complaint with the FDIC.