“Remember that credit is money.” – Benjamin FranklinThis is my response:
I’ve always considered my primary residence to be one of my most solid investments. So it came as a surprise yesterday when we got the letter from Citibank about our $168,000 line of credit:We have determined that home values in your area, including your home value, have significantly declined. As a result of this decline, your home’s value no longer supports the current credit limit for your home equity line of credit. Therefore, we are reducing the credit limit for your home equity line of credit, effective March 18, 2008, to $10,000. Our reduction of your credit limit is authorized by your line of credit agreement, federal law and regulatory guidelines.
Reduced to $10,000!? Hello!? Please don’t f-ck with my house in Newport Beach…
Of course, I’m calling them today to dispute it. Why? Because unlike the Phoenix property, I believe I can prove our home has retained its value and hasn’t declined. We have a Newport Beach address but live in what I’d describe as the low rent district of the city. It’s on the cusp of Eastside Costa Mesa and I believe the lender is using comps from Costa Mesa for comparison.
One reason why we bought in Newport is because we believed that property values would retain their value over time. After all, how many of you have heard of Costa Mesa? But most people have heard of Newport Beach. It’s considered desirable. People want the Newport Beach address. As real estate declines, it will decline more quickly in Costa Mesa. And it is.
But Newport hasn’t declined with any significance and if we compare current comps in our zip code, we can prove to the lender that our home has retained its value. Or so that’s my plan. I’m going to fight this one and I’ll write a follow up post about my success or failure with regards to the dispute.
First of all, despite what Benjamin Franklin has to say, credit is NOT money! Money is money! Credit can be converted to money, but it's not money until it is converted.
Second, we are in the middle of a credit crisis. There was an enormous, world-wide credit bubble. The bubble has burst. This means that credit will dry up and includes precious, unused HELOCs.
Third, the credit bubble led to inflated prices. This was especially true in real estate. I don't know enough about Newport Beach, but after looking some listings on Redfin, I found a couple that are selling for LESS than they were purchased just a few years ago:
311 32nd ST
Newport Beach, CA 92663
Last Sale: $1,270,000 (06/23/2005)
Asking Price: $879,000
209 38th
Newport Beach, CA 92663
Last Sale: $999,000 (11/03/2006)
Asking Price: $959,000
2227 Cliff DR
Newport Beach, CA 92663
Last Sale: $4,996,000 (11/30/2007)
Asking Price: $4,695,000
Many others are asking for basically the same price they were purchased for just a few years ago. That equals basically 0% appreciation.
According to Yahoo foreclosures, there are 113 listings for Newport Beach. More evidence of a housing bubble gone bad.
It's insane to suggest Newport Beach is immune from the housing bubble. Citbank probably did the right thing by shrinking your HELOC. Your house is no doubt worth less than it was.
Sorry to burst your bubble, so to speak...
Found this via Mish
3 comments:
Hello,
I'm a reporter with the Daily Pilot in Costa Mesa, California. Newport Beach is one of the cities we cover -- would you mind putting me in touch with the woman that contacted you? We would like to do a story on it.
Feel free to call me or email me with any questions. Thank you.
Chris Caesar
City Reporter
Daily Pilot
O: 714-966-4626
C: 508-868-1592
E: Chris.Caesar@latimes.com
Thanks again.
Newport Beach homes are selliing at 2004 levels and working their way down to 2003 levels. This is happening across all of Newport in Dover Shores, Newport Coast, and even One Ford. Many hope their house is valued at late 2007 peak prices because they owe debt at 90% of that level. You can still see listings at 2006/2007 prices hoping to get out even. But they get no bidders since all recent sales have been done at 2004 prices. Unfortunately, reality is not we sometimes want or need it to be. Very sad for these people.
all of the nation is living the bursting bubble syndrome. For anyone holding out for prices to come back, it is going to be a long ride. To suggest otherwise is not practical. Those of us in real estate wish the downturn would become an upturn, it isn't and won't for sometime. I work exhausting hours helping people, responsible, on time with their payments and fed up with debt servicing upside down values. We either work with the lenders to make the payments affordable to hang onto the home, or we sell the home at a price that makes it move ending debt servicing that is taking so much of the hard earned money that is a precious commodity in today's market. don't hang on and pay good money towards bad debt. Sell, look right down your street, I'll bet there is a home that comps to yours on the market for hundreds of thousands less right now. I too have lived this nightmare and through it have learned how to help you and what steps to take to save your credit and money before it all goes to the "bursting bubble". We are people helping people by educating them on their options in this foreclosure market.Rene' 949-263-1911 powersdevelopmentcorp.com call and network if nothing else, let's work together and maybe, just maybe, if enough of us help each other, a difference might be made. I'm fed up with the lenders getting millions and the borrowers getting nothing but a closed door in the face, and through tenacious efforts we are helping ontime borrowers as well as those behind in payments. Let's network, don't wait until your days from a trustee sale.
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