CLEVELAND: National City Corp. said Monday that its wholesale home equity unit has stopped taking applications for loans and lines of credit as problems in the mortgage industry continue to spread.
”This is one of a number of steps National City has taken in recent weeks to help ensure that originations are in line with existing and anticipated market conditions,” the company said in a statement. ”We are continuing to closely monitor the market and take the appropriate steps to best navigate market conditions.”
National City Home Equity offers loans and lines of credit through brokers that can be used in conjunction with the purchase of a home or the refinancing of one. National City is still accepting applications for such loans at its bank branches.
Home equity loans or HELOC’s (home equity lines of credit) are subordinated positions. Also called second mortgages. If the homeowner defaults there may not be enough money left to pay anything but the first mortgage (primary mortgage) thus the equity line becomes worthless and uncollectable.