AmTrust Canceling my HELOC. Goodbye, safety net!

A few months ago I wrote a post about AmTrust Bank trying to bribe me to close my Home Equity Line of  Credit (HELOC).  They only offered $50, and I passed.

But I worried that they’d cancel the HELOC anyway, and I was right to worry.

Yesterday I got a call from Mary at AmTrust, telling me that they would indeed be canceling the HELOC.  She again offered me the $50, as I “may as well take the money since you’re going to lose it anyway, ” because AmTrust is “getting out of the HELOC business.”    I was unhappy to hear this news, and told her I’d call her back.

I discussed it with Husband, and  even he really doesn’t see why I’m unhappy about losing the line of credit.  It’s not that we need the money.  My balance is zero, and has been since about 6 months after I opened it (I took it out to pay off my car loan so I could deduct the interest, then paid it off quickly anyway).

And we have a healthy savings.  Very healthy.  And a few other investments that could easily be turned back into cash with little lag time in the event of an emergency.  And we pay $25 a year for the privilege of not using it.

But I like knowing it’s there. I like it an awful lot.  It’s a $10,000 safety net.  Just in case.

So, instead of just being a proverbial  sheep, I  called Mary back today and asked for documentation that they had a right to do this.  After all, it was my understanding that this was a 15 year mortgage, which would give me 7 more years.  I want to see, in writing, the situations in which they are able to pull the plug.

I also want to know what happens if I take the money, and perhaps put it into another investment which would give greater returns than the interest I pay.  Would they call the loan?  Would they let me keep it until it’s paid off?

I must be the only person who has balked at all, because Mary was surprised by my request.  She then told me that if I’d like,  the bank next store would be happy to take my application for a new HELOC.

Not the  point, Mary.  I already have a HELOC.  And I’d like to keep it, thankyouverymuch.  I certainly don’t want to apply for any new credit, and I don’t want to pay any additional fees.

Mary didn’t know the answers, but promised to get them for me.

But, honestly, chances are slim to none that I’ll get to keep it.  So I’ll likely take the $50 buyoff.

And I’ll try to look on the bright side.

I’ll be saving $175 in yearly fees.  Add that to the $5o buyoff  and that’s a very real $225 more in my pocket.  So, if I do have an emergency, lets pray it’s an easily doable $225 hummingbird variety and not a $10,000 poop-my-pants Bigfoot.

Advertisement

AmTrust says, “We love you! Really! But will you please cancel your HELOC? We’ll give you fifty dolla!”

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.”

Uh huh.

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.

Huh.

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!

The IRS Tax Credit on New Cars May Make New Cars a Better Deal Than Used

The US Government really, really, really, REALLY wants  us to buy cars.

To help stimulate the industry – and our economy as a result – the IRS has reinstated the tax deduction for sales tax paid when purchasing a car.  I recall that when I bought my first car they’d just taken this deduction away from taxpayers, and if not so happy for having my first ever new car I’d have been a lot more peeved.

According to the IRS website, taxpayers who buy new passenger cars between Feb. 16, 2009 and Jan. 10, 2010 will be able to deduct their state and local sales and excise taxes on their 2009 returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle. The deduction phases out for individuals with modified adjusted gross income between $125,000 and $135,000, and joint filers with MAGI between $250,000 and $260,000.

The special deduction is available regardless of whether a taxpayer itemizes deductions on their return. The IRS reminded taxpayers the deduction may not be taken on 2008 tax returns.

So, this won’t lessen your tax bill this year.  But  if you’re facing a large car repair it might be worth it to get a new vehicle.  I’ve been reading that used car prices are increasing because people are unwilling or unable to take the plunge with a new car.   Between cut-rate pricing, very favorable financing and the new tax break it may make more sense to buy new – something I said I’d never do again.

Of course if you don’t need a car then it’s not frugal to buy one, no matter how good the deal. Thankfully our cars are in good shape.  Let’s hope it stays that way…

How Do They Sleep at Night? Vol 3: The Credit Card Companies Part 1 – A Wolf in Sheep’s Clothing

This article is part of a series of posts about people who screw people, sometimes for a living. And, hopefully, lessons I’ve learned and want to pass on.

They’re going to start coming any day now. I just know it. The offers from my credit cards, wanting to help me at this wonderful time of year.

They’ll send me “convenience checks“, which I can use to get a cash advance. Isn’t that nice?

Of course they won’t mention the transaction fee, or the fact that I start accruing interest on the day I write the check. Or the fact that they can decline the check for any reason at all. Even though they sent it to me. Even though they could have checked my credit beforehand, instead of after I’ve remitted it to a merchant as my promise to pay.

They’re swell.

I’m so overcome with gratitude!

But that’s not all! No, my credit card companies are the best of the best.

They’ll offer to let me skip my December payment! They know I’ve overspent. Heck, they keep track of it better than I do! This will give me some breathing room. I’m all choked up.

So. Very. Thankful.

Who cares if my interest still accrues? I’ll avoid a late charge. What’s $30 compared to interest on the average American credit card debt of $8400, and growing? Have you seen the cost of a Wii?

I’ll worry about January in January. I mean, I could win the lottery before my payment is due in January!

It could happen!

Oh, thank you credit card companies! You put the reason in the season!

Where can I get that Wii? And can I borrow $2o for lottery tickets?

Like this post? Read the other posts in this series!

See the Stretch Your Dollar Page for other money-saving ideas.