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Wells Fargo tells customers it's shuttering all Personal Lines of Credit - CNBC

4,707 Views | 29 Replies | Last: 2 yr ago by Sully Dog
BubbleBoyB
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AG
https://www.cnbc.com/2021/07/08/wells-fargo-is-shutting-down-all-personal-line-of-credit-accounts-.html

I watched this video.


Does this feel like a very big red flag to a lot of you? When banks do this it ripples through the economy higher inflation, higher interest, cause for a tighter economy. Just curious to hear some opinions and advice of people smarter than me. Thanks in advance

SIAP

BubbleBoyB
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RockOn
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Probably just fair lending issues. Move on
BubbleBoyB
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Well this and the 3.5T infrastructure bill have me very concerned. Who knows.
TxTarpon
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Actual footage of Wells Fargo customers claiming their class action suit proceeds.
cgh1999
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When the fed stops the flow of money, we will hit a recession. These lines are currently getting minimal usage and many of them are likely costing the bank more than they make. In a recession, these (mostly unsecured) lines will be the first to go bad.

The perception of cancelling like this is bad, but it's a good business decision if made in a vacuum. Reality is this will cost Wells a lot of business. They are transitioning from a heavy consumer bank to a corporate bank. This will just expedite that.

The other factor is this will help the bank continue to reduce headcount and overhead as they had a crap ton of employees supporting consumer lending.
94chem
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Pretty much anyone who owns a home right now can take out whatever they need at 1/3 the interest rate.
94chem,
That, sir, was the greatest post in the history of TexAgs. I salute you. -- Dough
azul_rain
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Let's go Economic Collapse 2 electric boogaloo
BubbleBoyB
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CGH, great reply and insight. Thanks all.
Four Seasons Landscaping
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Does a heloc allow you to use it whenever needed? That was the benefit of these. Having access to an extra $20k when needed, no questions asked.

Also, didn't wf get out of home equity too?
SteveBott
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HELOCs can be used like a credit card. Borrow, payback, borrow.

Most offer no closing costs if you keep the line open for a minimum time. You can borrow up to 80% of the value of the home.
Scimitar
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Assuming you meant 80% of value of equity in home...
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
SteveBott
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No.

Value 300k

First lien 200k

300 x .80 = 240

Max new loan is 40k
Scimitar
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Ok that's a little different. Total LTV is 80% but HELOC is net mortgage...which makes sense. Way it was phrased, suggested HELOC only
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
94chem
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I was just referring to cash-out refi's. I was able to use the recent run-up in real estate values to drop back down to 20% equity and take out enough to pay for college. The lender paid 1.5 points to buy my loan all the way up to 3.25%. So basically I got a way better deal on college money than I could from a student/parent loan. Meanwhile, I can invest the cash-out and draw it down as I need it. The point is that home equity beats any other kind of loan right now.
94chem,
That, sir, was the greatest post in the history of TexAgs. I salute you. -- Dough
Scimitar
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And for everyone else watching, this is how "the rich" use debt properly
The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
BubbleBoyB
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This is genius!
Diggity
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I'm pulling some equity out for a different use but same rationale.

The appraisal overshot my (admittedly conservatize) value estimate so now I'm getting a half point in credit that I wasn't even expecting...with a sub 3% rate. Can't complain there. Now I'm having to keep myself from taking out more.
94chem
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Diggity said:

I'm pulling some equity out for a different use but same rationale.

The appraisal overshot my (admittedly conservatize) value estimate so now I'm getting a half point in credit that I wasn't even expecting...with a sub 3% rate. Can't complain there. Now I'm having to keep myself from taking out more.
I'm sorry, but this thread only has room for one genius.
94chem,
That, sir, was the greatest post in the history of TexAgs. I salute you. -- Dough
Diggity
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mosdefn14
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PSA in Texas you can only have 1 "equity" product at any given time. If you have a cash-out, you can't get a HELOC until you pay the cash-out off. For this reason, I generally try to talk people out of cash-outs unless it's our only option. HELOC gives so much flexibility.
94chem
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mosdefn14 said:

PSA in Texas you can only have 1 "equity" product at any given time. If you have a cash-out, you can't get a HELOC until you pay the cash-out off. For this reason, I generally try to talk people out of cash-outs unless it's our only option. HELOC gives so much flexibility.
Can you clarify? Say I had a $250K mortgage. I refinanced, and now I have a $350K mortgage. A mortgage is a mortgage. Who cares how I got there? Starting with a $350K mortgage is no different than refinancing a smaller balance into $350K.

I can do the same thing on any of my other houses. It will come down to the same issues it always does - LTV, credit score, financial/income statements...
94chem,
That, sir, was the greatest post in the history of TexAgs. I salute you. -- Dough
mosdefn14
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A Cash Out Refi is coded differently than a Rate/Term Refi.

A Cash Out Refi is considered an "equity" product. So is a HELOC.

Cash out refi's you can do over and over again, but you'll incur closing costs and they aren't flexible (amortization & payback schedule).

HELOCs are generally free to open and are very flexible.

You can only have 1 of them open on a property at a time.

Example 1: House has a primary mortgage, or a rate/term refi, or no mortgage. You can get a HELOC (easy, often no fees), subject to LTV & DTI etc. HELOC is flexible - borrow, payback, repeat etc.

Example 2: House has a Cash Out Refi. You cannot get a HELOC while the cash-out is active. If you want more cash, you have to go through the cash-out refi process again (fees etc.)

I've found that Texas Lending.com refi's are often coded as cash-out refi's even if you only did Rate/Term. This isn't a fun surprise when trying to get someone a HELOC in the future.
Diggity
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I would think that if you can refinance the whole loan to an appreciably lower rate, cash-out refi makes more sense than a HELOC...but it certainly depends on the circumstances.
mosdefn14
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Trying to knock-out/consolidate debt & pay down over time, for sure cash out is the way to go.

My point was simply cash-out comes with a risk - that risk being you need more funds in a pinch, and can't get a HELOC due to the Cash-out being in place. You have to refinance again to borrow more against your house - which is time and money, and possibly subject the entire (now bigger) balance to a higher rate in the future.

For borrowing small amounts ($20k was an example above), I'd think twice about cash-out refi being the solution.
dallasiteinsa02
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My bet is that they looked at this line of business and it was not "Woke" enough. It was just a matter of time before they had to balance the lines of credit amongst the demographics of the country.
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itsyourboypookie
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dallasiteinsa02 said:

My bet is that they looked at this line of business and it was not "Woke" enough. It was just a matter of time before they had to balance the lines of credit amongst the demographics of the country.


That would be interesting.

They might be in the know on the gov banning the credit score system.

Low interest on any consumer goods will be a thing of the past.

But we can all just default abd apply again lol
Four Seasons Landscaping
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Quote:

Your Line of Credit account will remain open

We previously informed you that we plan to discontinue our Personal and Portfolio Line of Credit products and that your Line of Credit account would be closed. However, based on feedback from our customers (thank you if you provided feedback!) we are adjusting our approach. As a result, your Line of Credit account will remain open.

What you need to know
Your Line of Credit account ending in **** will remain open, and you may continue to use your account as you have done in the past.

The terms of your account are not changing, and you may disregard the previous product discontinuation communications you have received. No action is required from you.

We're here to help
For any questions, please visit Personal Credit Line Update.

Thank you. We appreciate your business and apologize for any confusion that this may have caused.

John Rasmussen
EVP & Business Leader
Personal Lending

agdaddy04
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Interesting
Sully Dog
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I read this as they thought there was going to be a retraction when the gov teet ran dry and then congress threw 5 T at the problem
Deplorable Neanderthal Clinger
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