Published: Apr 25, 2011 11:37 PM EDT
Updated: Apr 25, 2011 8:37 PM EDT

PORT CHARLOTTE, Fla-- Call for Action helps a Port Charlotte woman solve a banking nightmare.

Amy Machado's lender Bank of America closed an unused line of credit she had on her home mortgage. Suddenly, the bank charged nearly a thousand dollars to the account she thought was closed for flood insurance she didn't want. After spending weeks fighting with her bank, she called us for help.

"We had paid off our line of credit, we had paid off our house," said Machado.

Since the home was paid off, she decided to decline flood insurance.

"The flood insurance for our house is $3000 a year. So dollars and cents it was not worth re-upping our flood insurance especially when our house is paid off," she explained.

Amy was surprised when she received a notice from the bank. The line of credit was re-opened by the bank so they could charge her $990.90 for flood insurance. She would have to pay the outstanding balance with interest.

"The person that works in the president's office of Bank of America tried telling me that it was like a credit card. He said, 'Oh, it's like your credit card. Just because you paid it off doesn't mean it's closed. You have to go that extra mile and close it.'" Machado told WINK.

She says the bank insisted any customer with a line of credit have insurance. Frustrated, but not ready to give up, she kept fighting.

"They couldn't understand just the simple philosophy that I can't touch the account. I have no benefits of the account and they keep telling me well it's blocked but it's not closed. It's blocked but it's not closed," said Machado, "Myself as a customer, blocked, closed, it's the same thing. I have no access to it and it's paid off."

That's when we called the bank.

"When I called you things changed," said Machado. "We were still at an impasse and then somehow magically, it changed."

The bank agreed to wipe the debt away.

"I'm just happy that you responded to my call. I don't think it would have been resolved. This is a bank. They're very powerful. They can do whatever they want," she said.

You should know that home equity lines of credit DO work like credit cards.

If your home equity line of credit is blocked but not closed, there is still an active lien on the property.

Here are some tips Bank of America sent us:

-- Mortgage lenders will require customers to carry hazard insurance on their property, and in some cases flood insurance based on federal requirements.

-- When a lender "freezes" your home equity line of credit, it is not closed. If you have a zero balance, you may ask your lender to close the account. If customers decide to open a new HELOC (Home Equity Line of Credit) in the future, they will need to be re-approved and may incur additional cost to establish account.

-- If the lender is asking for proof of insurance, provide it right away. Most lenders will give a 45 day window to provide proof before the insurance is added.

-- The insurance is added to an escrow account, not the actual mortgage or home equity line of credit. This is a separate sub-account and the annual cost is broken down monthly and added to the mortgage payment.

-- If you think you shouldn't have to carry flood insurance, contact your servicer right away and explain your situation.