If you are selling a home and have a Home Equity Line of Credit (also known as a “HELOC”), you must “freeze” the equity line prior to closing. Like a standard mortgage, a HELOC is a lien against the property. However, a HELOC allows the homeowner to write checks against the HELOC’s funds.

Title companies require the HELOC to be frozen at closing, to insure that a Seller cannot write checks against the HELOC’s available funds between the time of closing and when the lender receives the mortgage payoff. If a Seller forgets to freeze the HELOC, the closing will either have to be adjourned or a large escrow will have to be held until the lender confirms that the equity line has been frozen.

 The process to freeze the equity line is simple. A Seller needs to contact his or her lender and obtain a form which authorizes the lender to freeze the account (if you are in a rush, you can usually get the form from the applicable local bank branch). After the signed form is received by the lender, a letter stating that the equity line account has been “suspended,” “frozen,” or “…blocked to prevent future advances…” will be generated.

If you are selling, you can reduce the stress level at your next closing by making sure that you give yourself sufficient time to obtain a “freeze letter” from the lender which issued your HELOC.