The Big Picture, a bear investment blog by Barry Ritholtz, recently highlighted a NYT article about home equity line of credit loans becoming scarce in an environment where banks are overextended and housing prices are falling.

Here’s the sickest part of the entire affair: Borrowers with an excellent credit rating will see their FICO score dinged when their home equity line is frozen. Why? When a lender suddenly caps a $50,000 line at $25,000, it appears that the borrower tapped out the entire amount of the loan. This reduces their score.

The NYT article also highlights Fee Disclosure, a website dedicated to helping home buyers discover and minimize hidden fees that are typically associated with mortgages.

If you were thinking of getting a home equity loan while interest rates are low, it looks like it still might be worth waiting it out for a few more months to see if the choppy waters clear and banks are less emotional about extending new HELOC loans.

On Tuesday, in a suprise event after a couple shaky days in worldwide stock markets, the Federal Reserve lowered interest rates 3/4 of a percent to 3.5%. Paul Kedrosky has reported that many people are already refinancing, but another rate cut may come at the next Fed meeting, which could drive rates lower. Reuters reports

Implied prospects for the Federal Open Market Committee to lower benchmark lending rates by 50 basis points next week FFG8, to 3 percent, fell to 36 percent early on Friday before roaring back to end the week at 70 percent.