SAN JOSE, Calif. — A growing number of homeowners around the country are finding themselves unable to borrow against the equity in their home, as beleaguered banks take away a financial safety net many homeowners had counted on. And now some of those homeowners are fighting back.
Cupertino, Calif., homeowners Jeff and Jenifer Schulken filed suit this summer against JPMorgan Chase, charging that the bank unfairly terminated their home equity line of credit even though the couple provided documents showing that they could repay the money.
“They weren’t even interested in verifying whether I could pay it back. They just want these things off the books,” Jeff Schulken said, adding he had $160,000 available on his credit line in March when he got a letter from Chase asking for tax documents. He sent them immediately, and was told when he called the bank that the inquiry was only a formality and his equity line was not in jeopardy.
“The next morning, I got online and we had zero available credit,” he said.
A spokeswoman for Chase said the company would not comment on pending litigation.
In the early part of this decade, home equity lines of credit, or HELOCs, were a regular feature of homeownership. Longtime owners sitting on a few hundred thousand dollars in equity could easily borrow against it to remodel, pay their children’s college tuition or use as a rainy-day fund. But falling property values and the financial meltdown that started last year have led banks to cut off many HELOCs, not letting the homeowner borrow any more money against his or her house.
Attorney Steven Lezell of Chicago law firm KamberEdelson is representing the Schulkens and hopes to gain class-action status for their case and other similar suits. The firm filed a suit against Wells Fargo last month on behalf of an Illinois homeowner.
Wells Fargo said, “We are confident in our fair and responsible lending practices, including how we determine home equity credit limits available to customers depending on the amount of equity in their home.” The bank also said it has a “fair appeals process.”
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe to the Coronavirus newsletter
Get the day’s latest Coronavirus news delivered to your inbox by subscribing to our newsletter.