Lenders are freezing, slashing, and cutting off home equity lines of credit (HELOC), but there's a growing manual of strategies you can use to avoid or mitigate what could be financially debilitating.

Some say it's better to take the equity money and run before lenders make a move. And why shouldn't you prudently cover your assets?

After all, lenders cover their assets when they reduce your home equity line of credit (HELOC).

When your lender issued you the credit card-like line of credit backed by your home, chances are, your home value was much higher.

Now with shrinking values, lenders want to shake you down to reduce the chance they won't get paid should you default on your home -- which now may be worth less than the total of your outstanding mortgages.

Consider it a home equity loan meltdown as home equity stakes have been stumped.

Maybe you didn't use proper home equity protection practices.

In any event, the Federal Reserve offers the latest come-to-your-rescue tips for dealing with home equity that's been hammered.

• Read the notice your lender sends you. Your HELOC lender must provide you a written notice if they have frozen or reduced your HELOC. Your lender must send the notice to you no later than three business days after the freeze or reduction. The notice also must include information about any other changes to your HELOC.

• Call your lender. Even if you have a good payment record, if your home's value has fallen, your lender may freeze or reduce your HELOC. Contact your lender if you have questions or concerns about a freeze or reduction.

• Learn why your lender froze or reduced your HELOC. A freeze or reduction notice should include specific reasons for the action. The most common reasons for a HELOC freeze or reduction are, again, a decline in the value of your home, or a change in your financial circumstances.

Understanding your lender's reasoning may help if you want to take steps to have your credit line reinstated to its original amount. For example, a lender may not be aware that you made significant equity saving home improvements to help shore up the value of your home and its equity.

Or, if your financial circumstances changed for the worse and that change resulted in a lower credit score, investigate ways to rebuild your credit.

• Ask your lender how to have your HELOC reinstated. Your lender must reinstate your credit privileges when the conditions permitting the freeze or reduction no longer exist. You may need to put in writing your request to have your line of credit reinstated. Once your lender receives your written request, they must promptly investigate and determine whether your HELOC can be reinstated.

• Remember that your lender can impose fees for reinstating your HELOC. Fees include costs for an appraisal or credit report. Your lender cannot, however, charge you a fee to reinstate your credit line once the condition that caused them to freeze or reduce your HELOC no longer exists.

For more information: New federal consumer protections for HELOCs are in the pipeline.

Published: September 10, 2009

Use of this article without permission is a violation of federal copyright laws.

Broderick Perkins parlayed a 30-year career in old-school journalism into a digital-age news service offering editorial content and related consulting services. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based content provider specializing in residential real estate, consumer news and consulting. An open house for news that really hits home, the DeadlineNews Group includes the umbrella website DeadlineNews.com the flagship blog Deadline Newsroom, and three Examiner.com outposts -- Real Estate News Examiner; Consumer News Examiner; and Offbeat News Examiner. Along with a decade of work here with Realty Times, Perkins also provides content for Silicon Valley based ERate.com and the new AOLNews.com, where now "You've got news....that really hits home." His current work can also be found in Californian publications, the San Jose Mercury News, San Francisco's The Registry and the Salinas Californian. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News, before launching DeadlineNews Group. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Nolo.com among more than four dozen publications. In addition to managing the DeadlineNews Group, Perkins served as chief editorial consultant for "Nolo's Essential Guide To Buying Your First Home."