JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

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wkimdds
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JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by wkimdds » Sat Apr 18, 2020 3:45 am

With a recession looming, the country's largest bank has put a pause on new home equity lines of credit for the foreseeable future.




What is consequences for this? Maybe another sign for crash?

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nps
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by nps » Sat Apr 18, 2020 6:14 am

Certainly food for thought for those who argue that HELOCs can serve as an emergency fund.

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nisiprius
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by nisiprius » Sat Apr 18, 2020 6:39 am

nps wrote:
Sat Apr 18, 2020 6:14 am
Certainly food for thought for those who argue that HELOCs can serve as an emergency fund.
+1

I bet something happens with credit cards soon. With unemployment estimated at 18% (by Fortune), a lot of people that were qualified for credit cards at the time they opened them probably aren't now.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

TravelGeek
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by TravelGeek » Sat Apr 18, 2020 12:25 pm

I don’t know if there is a connection, but an acquaintance of mine works for another mega bank and has been super busy dealing with the small business loans recently. He mentioned that they have drafted resources from all over the company into the effort - people who essentially had completely different jobs and responsibilities and were quickly trained for the task. They have been working every weekend for the past few weeks and expect that to continue for the time being.

So I wonder if a shift of priorities and resources could be part of the reason here.

Anyway, here is a story about Chase’s decision

https://www.nasdaq.com/articles/jpmorga ... ty-2020-04
nisiprius wrote:
Sat Apr 18, 2020 6:39 am
I bet something happens with credit cards soon. With unemployment estimated at 18% (by Fortune), a lot of people that were qualified for credit cards at the time they opened them probably aren't now.
Yes, I wouldn’t be surprised if we see more threads about closed or reduced credit lines here. I am spreading some of my spend across more cards that usually see no activity for most of the year to reduce the likelihood of them getting canceled. “Unfortunately” the number of small purchases (coffee and bagel) has decreased significantly over the last month.

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whodidntante
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by whodidntante » Sat Apr 18, 2020 10:17 pm

nps wrote:
Sat Apr 18, 2020 6:14 am
Certainly food for thought for those who argue that HELOCs can serve as an emergency fund.
If one NEEDS the money as a backstop, one should take a HELOC draw right now before the situation deteriorates further. The worst case is that one would needlessly pay interest.

They can restrict further draws, but there is no call provision.

AlphaLess
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by AlphaLess » Sat Apr 18, 2020 10:19 pm

wkimdds wrote:
Sat Apr 18, 2020 3:45 am
With a recession looming, the country's largest bank has put a pause on new home equity lines of credit for the foreseeable future.




What is consequences for this? Maybe another sign for crash?
Not surprizing. Their corporate clients are drawing down funds. The risk of defaults is moving from corporates to banks.

So they cut exposure anywhere they can.

This is phase 1.5.

Phase 1: immediate job loses, and helicopter money.

Phase 2: lending tightening based on hypothetical scenarios. The hypothetical scenario is that anyone can lose a job in the near future.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

vipertom1970
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by vipertom1970 » Sat Apr 18, 2020 10:19 pm

smart move from the company.
Last edited by vipertom1970 on Sat Apr 18, 2020 10:23 pm, edited 1 time in total.

fatcoffeedrinker
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by fatcoffeedrinker » Sat Apr 18, 2020 10:20 pm

nps wrote:
Sat Apr 18, 2020 6:14 am
Certainly food for thought for those who argue that HELOCs can serve as an emergency fund.
No one said you wait until the recession to actually apply for one. I have one, and I drew on it early to make sure it was available. I'll pay a few months of interest for peace of mind, then repay it if I don't have to use it.

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wkimdds
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by wkimdds » Sun Apr 19, 2020 12:09 am

AlphaLess wrote:
Sat Apr 18, 2020 10:19 pm
wkimdds wrote:
Sat Apr 18, 2020 3:45 am
With a recession looming, the country's largest bank has put a pause on new home equity lines of credit for the foreseeable future.




What is consequences for this? Maybe another sign for crash?


Not surprizing. Their corporate clients are drawing down funds. The risk of defaults is moving from corporates to banks.

So they cut exposure anywhere they can.

This is phase 1.5.

Phase 1: immediate job loses, and helicopter money.

Phase 2: lending tightening based on hypothetical scenarios. The hypothetical scenario is that anyone can lose a job in the near future.

Not to be a doomsdayer but with jpm tightening money lending, i think they assume further downturn

anoop
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by anoop » Sun Apr 19, 2020 12:39 am

They are probably too busy making a risk-free 1% dispensing a few trillion of federal funds, so why bother with wasting time processing applications that are unlikely to lead to any meaningful revenue?

jpmorganfunds
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by jpmorganfunds » Sun Apr 19, 2020 12:43 am

With low interest rates I was going to take out a HELOC to buy stocks. Oh well.

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asset_chaos
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by asset_chaos » Sun Apr 19, 2020 4:35 am

nisiprius wrote:
Sat Apr 18, 2020 6:39 am
I bet something happens with credit cards soon. With unemployment estimated at 18% (by Fortune), a lot of people that were qualified for credit cards at the time they opened them probably aren't now.
Indeed. I recall in 2008 banks imposed credit limit cuts to cards. I had a derisory $600 cut from the limit of a card. It wouldn't be surprising at all to see something similar this time around, especially if lock downs continue and household finances come under additional stress.
Regards, | | Guy

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Harry Livermore
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by Harry Livermore » Sun Apr 19, 2020 6:56 am

Chase CLOSED a business line of credit on me during the GFC. I had a small outstanding balance which, of course, they said I was free to let ride and pay interest on. I was doing great; in fact, the time between 2008-2015 were my peak earnings years. I told Jaime Diamond to go take a hike and paid the whole thing off.
Right at the start of COVID, I took a small draw from both my business LOC and our HELOC. Just in case. I might actually take a little more this week.
Banks are wily. The mostly loan to people who can show that they don't need the money, and when you might actually need the money they restrict your access to the loan. It's brilliant actually. These guys are such heroes they ought to erect statues to them.
This is why our goal is to be debt-free in retirement. My greatest joy is when I can say "no thank you" to a banker. Almost there.
Cheers

AlphaLess
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by AlphaLess » Sun Apr 19, 2020 6:01 pm

wkimdds wrote:
Sun Apr 19, 2020 12:09 am
Not to be a doomsdayer but with jpm tightening money lending, i think they assume further downturn
Big time!
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.

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alpenglow
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by alpenglow » Mon Apr 20, 2020 4:09 pm

Harry Livermore wrote:
Sun Apr 19, 2020 6:56 am
My greatest joy is when I can say "no thank you" to a banker. Almost there.
Amen.
Outside of credit cards that are paid off monthly, I'm finally there. Bought a new car for cash for the first time and it felt great.

mikep
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by mikep » Mon Apr 20, 2020 4:12 pm

I have an application in the pipeline and closing next week. Am I affected?

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whodidntante
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by whodidntante » Mon Apr 20, 2020 4:12 pm

jpmorganfunds wrote:
Sun Apr 19, 2020 12:43 am
With low interest rates I was going to take out a HELOC to buy stocks. Oh well.
You still can. Although I'm not sure why you would pay rates as high as those you'll pay on a HELOC. Just buy equity index futures.

Bogle_Bro
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Re: JPMorgan Chase Stops Accepting HELOC Applications Due to Coronavirus Uncertainty

Post by Bogle_Bro » Mon Apr 20, 2020 4:44 pm

TravelGeek wrote:
Sat Apr 18, 2020 12:25 pm
I don’t know if there is a connection, but an acquaintance of mine works for another mega bank and has been super busy dealing with the small business loans recently. He mentioned that they have drafted resources from all over the company into the effort - people who essentially had completely different jobs and responsibilities and were quickly trained for the task. They have been working every weekend for the past few weeks and expect that to continue for the time being.
We are doing this at Bank of America, it sucks!

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