I just got an amazingly moronic letter from Suntrust Bank. I certainly can understand why banks are in such deep trouble, given that they appear to be staffed by a pack of monkeys.
For a little background, I own a home with a 4.375 percent 15 year conventional mortgage I got 6 months ago courtesy of the meltdown. Thats a great mortgage no doubt. I have substantial equity in my house, even after the presumed loss of value. I have perfect credit.
The letter I received yesterday advised me that my (unused) home equity line of credit was frozen immediately due to "market conditions". What the letter didn't say, but I confirmed on the phone just now is, even though I am frozen out of my credit line they still will keep a $90,000 lien on the house. And if I want to cancel it, it will cost me $1500.
While you might think I am making this up, the representative on the phone confirmed I cannot close the line to free up the lien, because its been open less than 3 years. And yet, even though my equity line is a zombie and a member of the undead, they will keep the $90,000 lien in the courthouse preventing me from opening another line with a bank that has a little more analytical skills.
I am not stupid. I am a financial analyst and follow real estate. I understand why they would be nervous about credit lines and want to restrict some.
But, Suntrust is following a perfect recipe for killing themselves off in this tough climate:
1.Take your best customers, the ones with perfect credit, low loan to value balances, good jobs and with a lot of cash at your bank. Then find the ones who have conservative mortgages, steady jobs, and whose house is still worth more than they owe.
2.Send them letters freezing their home equity line of credit. Don't actually kill the credit line, but just make it a zombie loan, with no borrowing power but still encumbering the homeowners credit for a loan he no longer can make. This will piss off the customer double.
3.Threaten them with an early termination fee when they call.
I am waiting for a callback higher up the food chain there before I start closing accounts at Suntrust and seeing what legal action I can take with various state agencies, but the arrogance and stupidity of the banks just never seems to end in my view.
After this letter and this phone call I am less convinced that anything we can do can save the banking system. It seems to be a ship of fools to me. Let it die and start with a clean slate.