Many homeowners struggling with payments are faced with another crisis: Morgan Stanley, the second biggest U.S. securities firm, has informed thousands of clients that they cannot withdraw money on their home equity lines of credit.
A source close to Morgan Stanley notes that most of the homeowners denied access to lines of credit had homes hit hard by recent steep losses in the housing market. (Bloomberg, Aug. 6)
The decision is yet another indicator of the depth of the economic crisis. Economic analyst Brad Hintz noted, “[T]hey don’t think the economy is going to recover quickly.” Bank of America and Washington Mutual have also suspended home equity credit lines.
For working people already struggling to stay afloat in the midst of the economic crisis, loss of access to home equity credit is yet another blow. Foreclosures more than doubled across the United States during the second quarter, with one in every 171 households receiving a foreclosure notice.
