PHOENIX, March 27 (UPI) -- Declining equity of U.S. homes is leading to battles between banks, as institutions holding second liens worried about the risks of their investment.
Banks that financed home equity loans are moving to stop homeowners from refinancing their home or blocking the home's sale, The New York Times reported Thursday.
Lender CitiFinancial recently rejected a home sale that would have left it with $1,000 after Chase Bank, which held the mortgage, was paid off. The value of the Phoenix, Ariz., home had declined 18 percent since 2006.
Homeowners Randy and Dawn McLain fell behind on their mortgage after Randy retired due to a back injury, the Times said.
The McLains owed a total of $370,000 and received an offer of $300,000 for the home.
J.D. Dougherty, the realtor involved in the deal, pointed out that blocking the sale may bring the home closer to being seized. "If it goes into foreclosure, which it is very likely to do anyway, you wouldn't get anything," he said.
Other banks, like National City of Cleveland, Ohio, have stopped homeowners from refinancing first mortgages until their home equity loans are paid off, the report said.
