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Home Equity HELOCs

What Is a HELOC Freeze Letter?

Updated Jul 01, 2023   |   4-min read
Aly Yale Author Photo
Written by Aly Yale
Aly Yale Author Photo
Written by Aly Yale

Expertise: Home equity, mortgages, real estate

Aly Yale is a freelance writer with more than a decade of experience covering real estate and personal finance topics.

Learn more about Aly Yale
Gail Urban, CFP® Expert Photo
Reviewed by Gail Urban, CFP®
Gail Urban, CFP® Expert Photo
Reviewed by Gail Urban, CFP®

Expertise: Investment management, financial planning, financial analysis, estate planning, life insurance, student loan management, debt management, retirement planning, saving for college

Gail Urban, CFP®, AAMS®, has been a licensed financial advisor since 2009, specializing in helping individuals. Before personal financial advising, she worked as a business financial manager in several industries for about 25 years.

Learn more about Gail Urban, CFP®

If you have a home equity line of credit (HELOC), your credit line isn’t always guaranteed. In some cases, your bank or lender may freeze your account, stopping all future withdrawals. When this happens, your lender will mail you a HELOC freeze letter. 

Why might this happen, and what should you do if a freeze letter arrives at your home? Here’s what you need to know.

In this guide:

Why would I receive a HELOC freeze letter?

Your lender will regularly review your account and status. 

Based on these reviews, it could freeze your HELOC and stop you from making future withdrawals. 

It might do this if its review reflects:

  • A loss in home value: If your home loses significant value, you could end up owing more than it’s worth. This would make it impossible to sell your home and settle your HELOC balance with the proceeds. Your lender wants to prevent this, or at least prevent the problem from worsening, so it may freeze your account to keep you from borrowing more. 
  • A job loss or financial change: If you lose your job, divorce, or make some other financial change, you might find it challenging to make your HELOC payments. If your lender finds out about one of these events, it may freeze your account to stave off future payment challenges.
  • A drop in credit score: Sudden drops in your credit score can indicate a financial hardship and may mean you’re less likely to stay on top of payments. If that happens, your lender might freeze your HELOC to ensure you don’t withdraw more than you can pay back.

If you receive a freeze letter, it should indicate the reason. Call your servicer and talk to a representative if you need more details. 

What should I do if my lender sends me a HELOC freeze letter?

If your lender sends you a HELOC freeze letter, you can take the following steps:

  1. Make sure you understand the reason for the freeze. If you need to, call your lender or servicer for more information.
  2. Be sure to stay on top of your payments. Despite the freeze, your payment terms won’t change, so you’ll need to keep repaying your lender as agreed. If you don’t, the lender could foreclose on your property. 
  3. If you believe the freeze is based on incorrect information—for example, the lender claims your home’s value has dropped, but you’ve made valuable improvements since you took out the HELOC—you can file an appeal. 

You can also request reinstatement of your credit line later if conditions change. Just keep in mind: If the freeze is due to a drop in home value, your lender will likely require a new appraisal before it reinstates your line.

Can I send my lender a HELOC freeze letter?

You can freeze or terminate your HELOC yourself. You might need to in certain situations. For instance, you might send your lender one before selling your house. A HELOC is a lien against the property, so you must settle it before transferring the title. 

You can get a form authorizing the lender to freeze the account online or from a local branch.

How is a HELOC freeze letter sent?

From your lender to you

By law, your lender must provide written notice within three days of freezing your HELOC account. This should arrive via mail at the address on the home that secures your HELOC. 

The letter should include the reason for the freeze and directions to reinstate your credit line should conditions change. 

It should also contain your lender’s contact information in case you have questions or concerns. 

From you to your lender

Title companies and real estate attorneys often recommend sending a letter to your lender that includes the following information to request a freeze or termination: 

  • Your account number
  • Borrowers’ names
  • Property address
  • County in which the home’s deed is recorded 

You can also request a specific form to do this from your lender. Once it receives your request, your lender should send a letter indicating your line of credit is “suspended,” “frozen,” or “blocked to prevent future advances.”

Find out more about how HELOC repayment works.