Thread by @ronmortgageguy

New Approach / Same Results

In 2015 and 2016 HELOCS were ubiquitous, you would get mail from random banks offering to place their HELOC in second position to another bank's mortgage on your house, they offered to cover registration costs and had special "teaser" rates

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/2 In 2017 the Regulator got pissed about HELOCS as growth hit double digit levels

The reversal in house values in 2017 in some regions tweaked bank's Risk departments because HELOCS were non-amortizing and readvancible

Promotion of HELOCs cooled

But wait there's more!

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3/ Here's what happens when you call a bank about HELOCS today:

Client #1 daughter has to put a deposit on a condo and Dad wants to help, when the condo is ready in 4 years likely daughter can pay him back its 10%, $55K, Dad has a mortgage from a company that doesn't

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/4 offer HELOCs so Dad asks his own bank for a second position one, Dad is a great borrower all the numbers work: Bank says No, have no real explanation BUT they will let him break his existing mortgage, pay a penalty and give him as big a new first mortgage as he pleases

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/5 Client #2 again has a first mortgage with a lender that cannot supply a HELOC needs $30K to pay off her car lease in Feb and then when the mortgage is up for renewal in Oct she will combine the 2 instruments into one new mortgage, again, perfect candidate: bank say No

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/6 Again bank wants her to break existing first mortgage pay the penalty and get a whole new first mortgage

The lesson is that although HELOCS are tougher to get the banks are still super happy to provide more home debt lending but now they want it to be a mortgage