Household HSBC Watch

HSBC made the news again. This time it was an article about home equity lines of credit — or the fact that such credit lines are frozen or gone all together. When Denise Lopez bought two new tables, a floor lamp and a chair recently, her intent was to finance it with her home equity line of credit. But it wasn’t long before she discovered that wasn’t an option — her HELOC had been frozen. Lopez didn’t recall seeing a notice until it was too late; her lender, HSBC, says that a letter was sent. Although there is no evidence to support the theory I vote for Lopez’s side of the story. When HSBC quits sending statements on or near the due date I will revisit my position.

Two other theories are being kicked around the office. One is that HSBC sends so much worthless mail that nobody wants to read it. That is how HSBC modifies existing contracts. Another theory circulating in the office is that HSBC called and sent so many worthless ARM proposals that nobody reads their mail any more.

It seems that “the banks are freezing the HELOCs first, and evaluating case-by-case later,” said Julian D. Hebron, loan consultant and vice president of RPM Mortgage in San Francisco. One client of his recently had a line frozen, even though he earns a hefty paycheck, has substantial equity in his home and has “perfect” credit. That is a situation HSBC wants to prevent. With a history of predatory lending and high interest rates, HFC and Beneficial Finance seem to put the customer second and the profits first, reducing one’s FICo score as much as possible to guarantee repeat bsuiness and frequent flyers. It is a sorry state of affairs that may sson change.