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This is a CNBC special report. Is your money safe?
Home owner Erik Shultz was hoping to draw on his home equity line of credit to help
pay off the property tax of this rental investment. Instead he got a rude awakening in this letter
from his lender, Countrywide.
"You will no longer be able to draw on the line. You will not be able to use checks that
you may have previously received."
So Erik had to go to his parents for a loan to cover the thousands of dollars he had access
to but doesn't anymore. He is not alone, Countrywide financial has sent out letters like this pulling
credit lines from a million customers and despite the $700 billion dollar bailout package,
Washington Mutual has just now begun notifying its customers that they will no longer have
access to equity lines and credit, beyond what they have already taken.
Credit is going to get really tight and it's going to impact not only people that don't
deserve credit but its also going to impact people who are credit worthy and should be
getting credit.
Which means that as bad as things are they could get much worse. Experts say the money
is there, interest rates are low, but once bitten banks are now twice shy. Making it
harder for borrowers to get that money even if they were promised it to begin with.
I was very upset you know, I've always prided myself in being, having the highest level
of integrity when it comes to my finances and you know I just felt like I was being
you know treated like a like a deadbeat.
Yeah a deadbeat indeed and you know there's sort of a double whammy involved in all this
as lenders start to cap loans at what borrowers have already used because now these loans
are starting to show up on your credit report as maxed out and that could lower your credit
scores and that of course will make it more difficult as you try to find loans elsewhere
and that of course is if you can even find those loans elsewhere.