I just got a really weird phone call. But first a little background…
AmTrust Bank is one of the banks with which we do business. It’s the bank where I purchased my mortgage, and a week later took out a $10,000 Home Equity Line of Credit to pay off my car loan. The HELOC is actually a second mortgage of sorts. I don’t recall right now if it was a ten or fifteen year agreement, but I do recall that they gave me a $100 Home Depot gift card for opening it, and they charge me a $25 fee to keep it, with no penalty if I close it as long as I keep it open for at least three years.
I took out the HELOC so I could deduct the interest, and made the car payment to my HELOC instead of a bank until I paid it off six months later. I’ve not used it since, but that $10,000 is available if I need it.
I may not use that credit line, but I like knowing it’s there if I need it. Despite having a five-figure emergency fund, one never knows when one will have a really big emergency, does one? That’s why we decided it was worth $2 a month to keep it open.
Since the most recent financial crisis began I’ve been reading and hearing stories about some of the things banks are doing to reduce their exposure to debt – good and bad. Credit card interest rates are being hiked while credit limits are being slashed. HELOCs are being canceled and/or closed, whether people are carrying a balance or not.
I’d hear things like that and wonder if any of the companies with which I do business would take these actions. I’ve not really worried about it since we pay our balances off every month, and we don’t need the credit to survive. We have excellent credit, so I understand that if a company makes one of these decisions that affects me that it isn’t about me at all – it’s about them. I have my financial house in order – they’re scurrying to do the same.
So today I get a phone call from said bank, asking me if I’d yet received the letter about my HELOC. No, I had not. But already I’m thinking that they’re closing it, and calling to lessen the blow. I’m already composing my reply in my head when what she is staying starts filtering through. I heard a few phrases – “we’ll pay you $50” and “if you want to” and “no penalty” and “just stop by to fill out the paperwork“.
Whoa. “Let me get this straight,” I say. “AmTrust is willing to pay me $50 if I close my HELOC?”
“Yes, and there’s no penalty.” Well, there’d be no penalty anyway, chica. But I held my tongue.
“But I don’t have to if I don’t wanna?”
“No. You may keep it open if you wish.”
I end the conversation and hang up, thinking that AmTrust really, really, really wants to close the HELOCs but really, really, really doesn’t want to piss off their customers.
Well, I’d like to keep my HELOC. But I have to figure out AmTrust’s next move. What will they do if not enough people voluntarily surrender their HELOCs? Are cancellations next?
Am I better off taking the $50 now, or waiting, hopeing they don’t cancel it? Waiting and getting nothing.
I’m feeling the love!
4/9/09 9:52 pm Edited to add:
I just ran across this article which describes a classs action lawsuit against AmTrust accusing them of illegally suspending these types of accounts. No wonder they are looking for a kinder, gentler way of getting rid of that risk!