Wells Fargo Being Sued Over Home Equity Loans
I can't muster much excitement over the news, reported by the Associated Press, that a customer of Wells Fargo has filed suit in an Illinois court against the lender, claiming it improperly reduced his home equity line of credit. The borrower, Illinois resident Michael Hickman, and his lawyers are trying to get class-action status for the suit. They say Wells Fargo inappropriately reduced credit lines using a faulty computer model and improperly notified borrowers of the change. Wells Fargo responded with a statement defending its lending models.
Even if Hickman and his lawyers succeed with a class-action suit, borrowers who join such a suit would probably walk away with a pittance in compensation. By the time lawyers' fees and expenses are subtracted from most class-action settlements and the remainder is divided among all the members of the class, the settlement pie has been minced to crumbs.
Regardless of the merits of the suit, we may all be better off with lower HELOC lines anyway. Remember, during the boom, when lenders would approve a 100 percent--or higher-- loan-to-value ratio (considering both the first and second mortgage)? When you would refinance, lenders would offer you a cheap and easy HELOC as a little bonus on the deal. Think "do you want fries with that?" It turned out to be not such a painless add-on after all.
Has your line of credit been reduced? Do you think it was done fairly? And has a home equity line of credit been a help to your finances--or a burden?
Posted by: laura33 | August 20, 2009 1:37 PM | Report abuse
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