Posted on May 16th, 2008 in Mr Mortgage's Personal Opinions/Research

SunTrust, one of the few remining wholesale mortgage lenders is eliminating Home Equity Lines of Credit (HELOCs) in most of their highest producing regions post haste. ALL LOANS MUST BE SUBMITTED BY TODAY AND FUND BY 6/19. We know this is certain in CA and are working on getting all other states impacted now.

Same-day notice to submit is drastic…they could have at least given the brokers 48-hours notice. Even worse, the West Coast AE’s got a notice mid-morning that ALL HELOCs had to be faxed to FL by 2pm PST. They got the email that they were losing it at 7:10am this morning. So, corporate give them a whopping 7hrs to get every loan in, boarded and faxed to FL for underwriting. That is a total mess. This move comes just one day after Chase did the same thing.

So, either SunTrust was selling all of their HELOCs to Chase or something very bad is happening in the second mortgage arena. ‘Thebfgb’ from the ML-IMPLODE Forum pointed out that maybe they just did not want to be the last big boy standing doing HELOCs and be used as a dumping ground.

There will be more to this story I am sure. Not, necessarily anything bad about SunTrust, because I believe they are one of the better banks. But, rather about the Home Equity Line disaster yet to be acknowledged.

On a positive note, wholesale mortgage loan volume has surged in the past week. I will have a report on that out later today. Most remaining wholesale lenders, including SunTrust, are very busy right now.

MORE NEWS…As I was typing I got an email saying WAMU will be shutting down HELOC’s as well. I have not confirmed this, but at this point I probably don’t need to.


Home Equity Line Suspension Goes Countrywide, City By City

Home Equity Loans – A Big Bank Killer

25 Responses to “SunTrust Stops HELOC’s TODAY!! BROKERS – SUBMIT TODAY”

  1. Hey, how come they don’t report this or the Chase story yesterday on cnbc or any other news channel? Accident? Too much other breaking news? LOLOLOL!

  2. I am actually sad about this. Though I compete against Suntrust, I actually like them. They’re a strong lender with good gov’t underwriting. They’ll be fine.

  3. Not a true story. Suntrust only pulled the plug on HELOCs in areas of Declining Markets.

  4. You got this wrong. The notice that came out today said they are making changes to their CLTV and guidelines and reducing overall CTLV to 85%, NOT GETTING RID OF HELOCS.

  5. ST isnt going anywhere.

  6. May 16, 2008

    BRO 08-114


    Effective for Applications on or after May 19, 2008

    Due to continuing adverse market conditions, the updates announced in this bulletin will be

    effective for applications (i.e., SunTrust credit packages received) on or after Monday, May 19,

    2008. All loan applications PRIOR to May 19, 2008 will be honored; however, must close and fund

    by end of business June 19, 2008. The updates to the Flex Equity Line product are listed in attached memo.

    Geographic Restrictions

    The following states are no longer eligible for Flex Equity:

    • Arizona,

    • California,

    • Colorado,

    • Illinois,

    • Massachusetts,

    • Michigan,

    • Nevada, and

    • Ohio.

    Occupancy and Property Types

    • Second home condominium transactions are no longer eligible with the Flex Equity Line


    • As a reminder “New” condominiums in the state of Florida are not eligible.

    “New” condominium projects are projects with one of the following characteristics:

    • less than 90% of total units sold,

    • project is not fully complete (including units, common areas and amenities), or

    • homeowners’ association (HOA) has not been turned over to the unit owners.

    Note: The more restrictive of SunTrust Mortgage FNMA/FHLMC Condominium and

    PUD Approval Requirements policy or the above restrictions apply.

    Loan to Value Adjustments

    • Condominiums

    • For all equity transactions on a condominium the maximum TLTV/HTLTV is reduced by 5%.

    • Second Homes

    • For all equity transactions on a second home the maximum TLTV/HTLTV is reduced by 5%.

    • Declining Markets

    • For all equity transactions on properties in markets identified as declining, the maximum

    TLTV/HTLTV is reduced by 5%.

    Notes: If there are multiple reductions applied to a single property then they are applied


    Example: A condominium in a declining market would be subject to a 10% TLTV/HTLTV

    reduction, i.e. 80% Max HLTV.


  7. every bank is getting rid of helocs with chase just announcing yesterday. The following states make up 80% of suntrusts wholesale mortgage volume so essentially they are doing the same. Worst part about it is they didn’t give their brokers any notice. That isn’t right. 48-hours should have been given.

    • Arizona,

    • California,

    • Colorado,

    • Illinois,

    • Massachusetts,

    • Michigan,

    • Nevada, and

    • Ohio.

  8. even worse, the West Coast AE’s got a notice mid-morning that ALL HELOCs had to be faxed to FL by 2pm PST. They got the email that they were losing it at 7:10am this morning. So, corporate give them a whopping 7hrs to get every loan in, boarded and faxed to FL for underwriting. That is a total mess.

  9. With this news about 2nd mortgages, I assume they are anticipating far far greater declines in home prices. And so it begins…

  10. I said a Sun Trust is BUST-in!

  11. Credit contraction big time.Who knows ?
    It will far worse than that.

  12. Why would they still be doing Flex Equity in Florida? Did you forget to ad that state?

  13. What I don’t understand is the manner of retrenchment. Shouldn’t a bank, if ravaged on a particular lending product, just raise the terms of it? Meaning, shouldn’t the banks just require a higher LTV and charge a higher (say 8-9%) rate?

    Are they ending HELOCs because they simply don’t have ANY funds for disbursement? That would be scary.

    Can they not change the terms of existing credit lines or something? So they’re wiping them out and starting from scratch?

  14. Flex Equity is a product that belongs to the Mortgage Company and is being phased out in time in all markets. However, declining markets listed above that sold Flex, with huge losses, has had the plug pulled. The Bank now underwrites the Flex product as they were the ones buying it from the mortgage company. Ulitimately, when the Flex goes away, the Banks own Product, the Access 3, will replace Flex in states the bank is licensed in. It has always been a superior product to the Flex Equity anyhow.

    If anyone caught Fannies announcement yesterday regarding the new National Down Payment Requirements, it looks like there will no longer be declining Markets. I dont know how this will affect Bank policy on the Access 3.

  15. Great thought Truth – once and for all we will see how each individual bank feels about real estate. If a bank does not roll back their declining market policy when Fannie does, then they do not believe it is over and still do not want to lend in those areas.

    Fannie’s new inititiave is coming June 1st so the banks better hurry up.

    My guess is banks won’t follow those guides uness Fannie and Freddie massively changes their reps and warrants. Nobody wants liabiity for that.

    As a matter of fact, SunTrust won’t not even do 95% loans in CA even though Fannie warranted SunTrust to do so. This was a ST rule. The reps were pissed when they made this decision a while back.

    I have to do a post on this.

  16. What I don’t understand is the manner of retrenchment. Shouldn’t a bank, if ravaged on a particular lending product, just raise the terms of it? Meaning, shouldn’t the banks just require a higher LTV and charge a higher (say 8-9%) rate?

    You hit the nail on the head. The banks don’t have any money and the are anticipating far greater decline in home values.Our financial system appears to be in a controlled demolition.

  17. Bankers are just a bunch arrogant S.O.B.’s. No this would be to admit that they are a bunch of assholes. Mind you. That’s what I think about American bankers. Assholes. Only one country in the universe would allow 500 billion of NINJA loans. Twits and arrogant bastards that know perfectly that the godamn politicians will mop up their shit. A lot of people in the rest of the world hate America because of these bastards. So did your stupid politicians voted the 300 billion aid package to Lehman Brothers and Merrill Lynch ?

  18. Thanks Mr. Authier, that really helps the discussion. !?

  19. The Declining Markets is a whole ‘nother story. Given required reps warrants and the M/I cutbacks it is unlikely to have little if any effect on the LTV. M/I companies have already modeled which areas are declining and where they won’t insure. So the issue is moot, not to mention the significantly greater liability that the banks are now taking on each and every loan (another story being missed). FHA is likely to be king for 90%+ LTV loans for they next year or so.

    SunTrusts 85% LTV is a deal killer anyway.

  20. This week I learned that Quebec governement Caisse de Dépôt et placement du Québec, you know, our pension fund has more than 12,6 billion of money frozen in the good old US of A, because of the real estate fiasco. It’s about 7% of the assets.

    Commercial paper filled with freakin CDO’s that were sold by stupid canadian bankers as safe investments with higher yields. The 12,6 billion will be frozen till 2017 ! and our stupid colonized and dumb pension plan managers will be receiving if they are real lucky, 40 cents on the dollar.

    Bankers across Canada lost about 40 billion dollars of that US real estate toxic shit. Did you know evil-A, that the Canadian banking was almost kaput two monts ago ? We are really a bunch of stupid morons in Canada when it comes to USA.

    I just pray that these stupid canadian bankers have told the truth. But I think not. I believe that there is probably much more of this and that the shit will be hitting again the canadian banking system in october or november.

  21. With respect mr. authier i understand alot more about quebec than you may think I do – I have many close ties to Canada and the la belle province primarily. by the way and this is my favorite – my neighbor is from quebec, and became an american citizen so he could vote for bush – how do you like them apples? You obviously are very angry and you have every right to be so – but if all you are doing is bashing – it does nothing to advance ideas, solutions, or helpful advice to help others get through this mess – go ahead be pissed off, I know I am, but add a bit more than negativity and swear words – then perhaps we will get somewhere.

    As you already know your country is much more connected to this one (probably more than you may enjoy), but if we go down the shitter, Canada may do a bit better, but there will be alot of pain there too, so be careful what you wish for 🙂 Thanks.

  22. Not really. Ontario and Quebec are losing their manufacturing sector. You know the saying here. “When USA catches a cold, Canada catches pneumonia.” Something like that. We are losing 700 manufacturing jobs per week.

    Asia is eating all of us alive. Oil and gas is nice. But the industrial base is being destroyed exactly like in the US. I wish a little bit of sanity and peace, less cooking of the books, yes some regulation, less McManshions, less Hummers, more trains, more tramways.You know the nasty commie things from “OId Europe”.

    That stupid war has cost your country 3000 billion. And it has nothing to with Ben Laden. It was and is still a real convenient excuse to hide the real objective; cheap cheap oil supplies for Chevron and the gang.
    No fan of Bush indeed. Where’s the small and responsable government promised ?

    It won’t change a thing if the Democrats win. It never changes. Goldman Sachs have their men in both parties and they call the shots not the people. “We the people” have nothing to say. By the way the president of the Central Bank of Canada is also a guy from the Goldman Sachs mafia.

  23. Thanks for the post mr. authier,

    Now we have a discussion 🙂 and I agree with you, mostly. Yes, less hummers, more trains, but that infrastucture takes time, and while I can agree that my govt. was either asleep at the wheel or greedy or what have you, it really doesn’t matter now. And yes, I am close with people in manufacturing in both ontario and quebec, and until the last couple of years some of them were even paid in u.s. dollars, but their work is drying up, and it sucks. In addition I agree it won’t help who wins the u.s. election this mess is bigger than any one administration. So, all and all we are basically “f—-d” and short of marching in the streets I do not see any other solution than to take care of myself, and family and screw the people who refuse to take these issues seriously. All the while praying that I can hold it together. I am supposedly upper middle class, and fairly conservative with my $$ and I am feeling the heat, so what about everyone under us? god help them.
    and the war, gosh, yeah, it is costing us dearly, and not a fan of bush here either, and my favorite thing was he promised Iraq oil would pay for their own reconstuction, yup, okay, and funny the media never hammer him on that? The irony in our system is that typically the Republican party represents small govt, and allowing people privacy, etc. this administration has nothing in common with that “republican party” Not all of us are American Sheep.

    thanks again, I really appreciate constructive debate, (I most certainly do not need agreement) or discussion over time wasting assaults. 🙂

  24. Wow! Who’s left? GB Mortgage, M & T, the days of piggyback mortgages are over…

    I remember the last down turn in property values, when 2nd’s where hot, hot, hot! 125% CLTV! This is so crazy.

  25. Wonderful pages! Keep up the grat work.

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