Just a few days after it raised its lending standards to require nearly all purchase mortgage borrowers to have at least 20% down and a 700 FICO score, JPMorgan Chase is “temporarily pausing” its home equity line of credit offering.
Beginning April 16, Chase will no longer accept new HELOC applications. Customers with existing HELOCs will be able to continue to draw funds on those lines of credit, but the bank is not accepting applications for new HELOCs.
In a statement provided to HousingWire, Amy Bonitatibus, chief marketing officer for Chase Home Lending, said that the bank is making the change due to the “uncertainty” currently in the market.
“Due to the economic uncertainty, we’re temporarily pausing new applications for home equity lines of credit,” Bonitatibus said. “Customers can still tap into their home’s equity through a cash-out refinance of their existing mortgage.”
As Bonitatibus said, the bank will still allow customers to pull equity out of their houses through a cash-out refinance, which draws on the equity on the borrower’s mortgage.
A HELOC, on the other hand, is typically a second lien.
According to Chase, cash-out refis have been growing in popularity among its customers. Last year, for example, the bank did twice as many cash-out refis as HELOCs.
Chase had already shifted some of its HELOC staff to handle regular mortgages amid the refinance boom early last month before the country shut down.
And going forward, the bank will not accept any new HELOC applications. How long that pause lasts remains to be seen.