Morgan Stanley Puts Freeze on Thousands of HELOCs
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The credit market continues to get tighter and tighter. Morgan Stanley has put a freeze on thousands of their clients home equity lines of credit. The company says that the customers had declining home prices and they needed to protect their interests.
But for homeowners, buyers, and sellers, this is an ominous sign. The credit markets are in a bad spot, but instead of working their way out of it with smart lending, it seems like they are turtling up. Hiding and not doing business will not turn things around. Smart and responsible lending is the answer.
But if home sellers can find buyers and those buyers can not find financing, the house still will not sell. My biggest fear is the credit markets are getting so tight that even well qualified buyers will be left out of the market.
Morgan Stanley, the second-biggest U.S. securities firm, told several thousand clients this week that they won’t be allowed to withdraw money on their home- equity credit lines, said a person familiar with the situation.
The action mostly affected clients with properties that have lost value, according to the person, who declined to be identified because the information isn’t public. The New York- based investment bank will review home equity lines of credit, or HELOCS, monthly from now on, the person said. via Bloomberg.com
I heard more people about this, pretty interesting and I think it is a good move :) 
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Comment by Santa Barbara Real Estate Voice on 6 August 2008:
This issue is the main issue in many of our meetings. Even here in the Santa Barbara and Montecito CA area where there are many well-to-do families, lending is the hot topic.
Financing is the main reason deals are falling out and for many people the main issue with the slower market. I have worked with many buyers lately that feel the market has leveled in our area but financing is holding them back.