Tumbling equity pushes banks to pull back

SEATTLE, Feb. 29 (UPI) -- The mortgage crisis in the United States is causing banks to cancel equity loans that were once seen as easy, accessible draws for homeowners for ready cash.

IndyMac, Citigroup, Chase, National City and Countrywide Bank are among the banks that have restricted loans in recent months, as the era of using home equity to finance projects around the house -- or send the kids to college -- has changed dramatically.

Before the bank informed him the equity of his home had dropped 40 percent in California's central valley, one homeowner withdrew thousands on his equity line of credit to finance a home renovation project, The Washington Times reported. Midway through the project, with much of his house gutted, the bank froze his $95,000 line of credit, citing dropping property values.

The homeowner and his family had to move out, the Times reported.

"I'm not a deadbeat and I'd have kept this house for decades if I were able to fix it," said the homeowner. "But, now I'm screwed."

"It's an epidemic happening around the country," said Jay Robins, a Florida mortgage broker.

"When it was a lot easier, these were deals people were getting done," he said.