Wells Fargo announced Thursday evening that it is no longer accepting applications for new HELOCs.
According to Wells Fargo Spokesperson Tom Goyda, the change goes into effect today, May 1
In a statement, Goyda said Wells Fargo is making the change due to “uncertainty” in the economy.
“Wells Fargo Home Lending will temporarily stop accepting applications for all new home equity lines of credit after April 30,” Goyda said. “The decision to temporarily suspend the origination of new HELOCs reflects careful consideration of current market conditions and the uncertainty around the timing and scope of the anticipated economic recovery.”
According to Goyda, the decision to temporarily suspend the origination of new HELOCs does not directly impact the bank’s existing home equity customers, meaning borrowers with existing HELOCs will be able to draw funds on those lines of credit.
Wells Fargo’s move away from HELOCs comes a few weeks after Chase made a similar change.
Chase also cited “uncertainty” as a driver in its HELOC decision.
“Due to the economic uncertainty, we’re temporarily pausing new applications for home equity lines of credit,” Amy Bonitatibus, chief marketing officer for Chase Home Lending, said last month. “Customers can still tap into their home’s equity through a cash-out refinance of their existing mortgage.”
Chase’s HELOC decision came after the bank raised its lending standards to require nearly all purchase mortgage borrowers to have at least 20% down and a 700 FICO score.
Wells Fargo also raised some of its lending standards in April, temporarily suspending the purchase of non-conforming mortgages from correspondent sellers and scaling back retail originations of non-conforming refinances and conforming high-balance loans.