Font Size

Consumer

E-mail

Close Window E-mail This Page

Credit Bubble's Burst Hurts Many Coloradans

Required fields are marked with an asterisk(*)

Recipient E-mail:*
- Your Name:*
- Your E-mail:*
Add a Message:
Send me a copy of this e-mail.

Type the characters in this picture:*

Click here to refresh with new letters

The information you provide will be used only to send the requested e-mail and will not be used to send any other e-mail communications. Read more in our Privacy Policy

Send E-mail

Print Share + Comments

Oct 3, 2008 6:46 pm US/Mountain

Credit Bubble's Burst Hurts Many Coloradans

Written by CBS4 special projects producer Vicki Hildner

Reporting
Karen Leigh

LITTLETON, Colo. (CBS4) ―

Click to enlarge 1 of 1: The bank froze Tina Kuykendall's line of credit without giving what she says was adequate notification.
CBS

Close

numSlides of totalImages

Related Links

FAQ About Economic Crisis

In the past few years, it seemed as if the only direction home prices could go is up. But now, with loan fraud exposed and the sub prime loan fiasco, we have seen the real estate bubble burst.

And that means that the home equity line of credit bubble has also burst. For some people, that happened at the worst possible time.

Tina Kuykendall dreamed of a covered patio at the back of her Littleton home. Now, she walks around the half-finished project, feeling frustrated and helpless.

After the contractor started work, Tina wrote a check on her home equity line of credit to pay him. Only then did she discover that the bank had frozen her line of credit.

"I just said, 'You've got to be kidding,'" says Kuykendall.

The bank told her that she had been notified of the freeze by mail. But she says that letter has never arrived. Now she's living through the nightmare of a half finished project without the money to pay to get it finished.

"It is a nightmare," she says flatly.

Don Childears, CEO of the Colorado Bankers Association, says he's been hearing about frozen lines of equity credit, although this is the first time he has heard of someone who was not notified in advance. Childears says there are two reasons that banks are now freezing home equity credit lines.

"The investors who are the original source of the money get nervous and they aren't letting the original money through the system," says Childears.

And then there is Tina's situation.

"I didn't realize that my propperty had decreased $41,000 in the past year," says Kuykendall.

Childears says that the drop in real esate value means banks need to reduce the amount of credit allowed with the house used as collateral.

After passage of the economic rescue bill, bankers remain hopeful that credit might loosen in the coming months. Meanwhile, Childears advises consumers to be conservative. "Be cautious in all your dealings."

As for Tina, she is turning to the every reliable bank of Mom and Dad. The patio projecct will get finished because family will help pay the bills.

Additional Resources