One of the largest lenders in America, Wells Fargo, announced in early May that it temporarily stop accepting applications for home equity lines of credit (HELOCs) due to the uncertainty around the Coronavirus pandemic. As reported by CNBC, the bank said that that HELOCs are riskier products for banks because during foreclosure, the lender for the primary mortgage would be first in line to get paid in a recovery. Wells Fargo joins JP Morgan Chase who made a similar decision a few weeks earlier.
“Wells Fargo Home Lending will temporarily stop accepting applications for all new home equity lines of credit after April 30,” [Spokesman Tom] Goyda said in an emailed statement. The choice “reflects careful consideration of current market conditions and the uncertainty around the timing and scope of the anticipated economic recovery.”