May 6 (Bloomberg) -- Countrywide Financial Corp. has suspended the home equity credit lines of almost all its Las Vegas customers, including the $60,000 Christopher Whipple says he needed to expand his cell-phone accessories business.

``I hope this doesn't break me,'' the 35-year-old retailer said. His credit score was 790 out of a possible 850, putting him in the top 40 percent of borrowers. ``It's going to hurt more than I thought.''

Since January, Countrywide, Bank of America Corp., Washington Mutual Inc. and IndyMac Bancorp Inc. have frozen about 600,000 equity credit lines nationwide, said Michael Kratzer, president of a Bankrate Inc.-owned Web site that's fielding consumer complaints. The lenders are targeting borrowers in cities where property values are falling, including Las Vegas, Chicago and Los Angeles, he said.

Frozen credit and real estate declines are putting a chill on spending and hurting the economy. In February, taxable sales in Clark County, Nevada, which includes Las Vegas, fell 3.1 percent from a year earlier, dropping 13 percent at furniture stores and 6 percent for durable-goods wholesalers. In the same month, as it became harder to borrow money across the U.S., consumer spending rose at the slowest pace in more than a year.

``It's really putting borrowers in a panic,'' said Kratzer, president of feedisclosure.com in North Palm Beach, Florida. The amount of credit frozen nationally may be $6 billion, based on an assumption that the 600,000 borrowers each had $10,000 available, he said.

Proposed Takeover

Countrywide, based in Calabasas, California, plunged yesterday after Friedman, Billings, Ramsey Group Inc. analyst Paul Miller cut his rating and urged Bank of America to abandon its proposed takeover of the mortgage lender. Countrywide dropped 62 cents, or 10 percent, to $5.36 in New York Stock Exchange composite trading.

Charlotte, North Carolina-based Bank of America, the second- biggest U.S. bank, may have to write down the value of Countrywide's loans by as much as $30 billion because of declining home prices, Miller said in a report yesterday. A Bank of America spokesman said the transaction is on track to proceed as planned.

Homeowners' pain is acute in Las Vegas, where property values soared 50 percent or more during 2004 and 2005 and since have plummeted. Las Vegas housing prices declined 23 percent in February, leading 20 U.S. cities tracked by the S&P/Case-Shiller Home Price Indices. Nevada had the highest U.S. foreclosure rate in March: one of every 139 households.

Home equity lines of credit are a form of revolving debt often used to make home repairs or for other expenses, with the borrower's home equity as collateral.

$1.1 Trillion

U.S. lenders had $1.1 trillion in home equity loans outstanding as of last year, up 89 percent since 2003, based on the Federal Reserve's Flow of Funds data.

Amid flashing neon signs along the Vegas Strip, residents are losing access to credit that might have financed businesses or bought cars and other goods.

As many as 15,000 people in Las Vegas, or 5 percent of the total homeowner population, had credit lines suspended by Countrywide and other lenders, said Brad Henderson, president of Henderson, Nevada-based mortgage banker and broker Evofi One.

Jerry Tao, a part-time lawyer and spokesman for Evofi One's parent company, lost access to his $50,000 Countrywide line despite earning more than $500,000 last year and having a credit score he says was between 750 and 770.

Replacing Pathfinder

Though he never accessed the line, Tao, 40, said he'd hoped to redo his backyard and replace his 1995 Nissan Pathfinder.

Credit scores are a calculation of the likelihood a person will pay bills based on past history.

Countrywide, the biggest U.S. mortgage lender, stopped extending credit to 122,000 borrowers nationwide whose homes fell below appraised values, a practice permitted by bank regulations, the company said in a statement.

Pasadena, California-based IndyMac and Seattle-based Washington Mutual say they evaluate borrowers individually. Bank of America says it's reviewing all its home-equity credit lines and taking actions permitted by lending agreements.

The Las Vegas housing-market crash represents a turnaround since 2003, when the local economy and real estate were booming.

``If you had anything on the ball, you could make it happen in Vegas,'' said real estate agent Donna Marie Gold, 62, who built a $4.5 million fortune buying and selling properties over six years.

After failing to complete a single sale last year, Gold said she fell $22,000 short each month on payments needed to maintain 14 properties. Now two to four months behind on some mortgage payments, she's lost access to a $250,000 Wells Fargo & Co. equity credit line.

`New York Minute'

``The whole thing was upside down in a New York minute,'' Gold said. ``There needs to be some forgiveness in this climate with regards to credit and rebuilding one's credit.''

John Simon, 42, borrowed $35,000 on low-interest credit cards in 2007 to pay down his $63,000 credit line and save on the 11.75 percent interest he says Countrywide charged. He expected to be able to access the credit line later. When Countrywide froze the line, he wasn't able to get money needed to pay his bills.

``They took away the last amount of cash I had to make all the payments on my father's retirement home,'' Simon said. ``From a business standpoint, this was the stupidest thing I ever did. But it was so easy.''

To contact the reporters on this story: Vivien Lou Chen in San Francisco at vchen1@bloomberg.net

Last Updated: May 6, 2008 00:01 EDT