“In the coming year, OSFI anticipates conducting the following reviews at selected institutions: HELOC and Alt-A mortgages (focusing on US exposures), liquidity, and collateral management practices,” says Julie Dickson, superintendent, at the introduction to the OFSI’s 2009-10 report on plans and priorities.
Dropping home values mean HELOCS – which allow homeowners to use equity in their property to borrow money – may pose a greater risk to lenders, thus borrowers may have a harder time getting approved. Most financial institutions require homeowners to have at least 20% equity in their home to use the product.
Paula Roberts, broker at Mortgage Intelligence, Unionville, Ont., says she is a fan of HELOCs and wouldn’t want to see restrictions imposed on them.
“I think every homeowner should have some sort of line of credit because it’s immediate money if you need it for emergencies like a leaky roof or broken window,” says Roberts. “As long as people don’t abuse it because it’s always there. I think a HELOC, in particular, is more for the sophisticated borrower as opposed to somebody who always has access to money and is always drawing on it.”
Source: mortgagebrokernews.ca
