Hope for HELOCs?

As we all know, the home equity lending business has slowed to a crawl with many banks ceasing their direct mail barrage to home owners in select zip codes. Then again, not all lenders are backing away from home equity. I recently received a mailer from Citigroup of all banks, a lender that has gutted its residential finance business over the past two years, especially the wholesale channel. However, there is something to think about when you ponder the long term outlook for HELOC lending: if consumers today are locking in 30-year FRMs at 4% and they want to tap equity (when the housing market recovers) they will need a second lien. So, in other words: although the immediate prospect for HELOCs looks dicey, there actually is a future here. Of sorts.