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April 17th, 2008 8:19 AM by David W. Welch
Another in a long list of knee jerk reactions by lenders is in the news today. Countrywide is freezing 121,000 credit lines regardless of payment history. This is being done in response to regions where there are declining values. While they probably have the contractual right to do this, I don't know if that it is such a wise thing. When you consider that only a very small percentage of people default on their loans, why shut down everyone? Most of the defaults have been with the sub-prime loans, so why freeze the credit lines on people who may actually be planning to improve their property or make some other economy stimulating purchase? You would think that they could run some type of study to see which properties are truly going to be over the stated loan to value in the credit line.