Can a bank cancel my HELOC

You may be confusing the difference between cancelling a HELOC and freezing a HELOC.

When a HELOC is in good standing, a bank can generally cancel it only when it is at a $0 balance. A bank can cancel a HELOC to protect itself from exposure to a future loss. When you obtained your HELOC, the size of the credit line was linked to the value of your home. If the value of your property has dropped, which has happened quite a lot in many parts of the country, the bank becomes concerned that it will not be repaid for the loan, should you default on the loan. By cancelling the HELOC, the issuer prevents you from running up a debt that, were you unable to pay, they may not be able to collect.

In your case, I believe the worst case scenario you face is that having your HELOC frozen. Because you are making payments as agreed, they cannot cancel the HELOC or demand that you pay off the balance immediately. They can, however freeze the line of credit, preventing you from making additional use of the equity line. If your HELOC is frozen, you must continue to pay on it as agreed. Once the balance is paid off, the bank can cancel the HELOC, readjust the maximum balance that you can carry on it, or reinstate it.

If you are ever shopping for a HELOC, it is a good idea to read All About Home Equity Line of Credit Loans.

You mentioned a separate issue in your question, regarding a problem you have with Bank of America. You certainly have the right to withhold payment from them, but doing so can have serious negative effects. You may find yourself subjected to penalties, interest, and stratospheric rise in the interest rate on your account, as well as serious damage to your credit rating. It is rarely wise to take unilateral action as you have done, regardless of how angry you are.

As you did not describe the circumstances that occurred, I cannot comment on what the proper course of action would be. I do feel that the problem will not go away on its own and will only be worse once the issue comes to a head, the longer the problem drags on.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com