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Home Equity Debit Card Withdrawals & Reg E
Answer by: John Burnett, BOL Guru
BIO AND CONTACT INFO
Question: Is it possible use a debit card for withdrawals from home equity line of credit? If so, does Reg E apply and how do we disclose?
Answer: Is it possible? Yes. Is it advisable? Some folks might argue that you're making the equity too readily accessible. But we already let customers write checks against their equity, don't we?
If the debit card will access the equity line directly (without first creating an overdraft in checking), adding this feature is subject to Regulation Z's requirements on issuing credit cards. In addition, Reg. Z, rather than Reg. E, will control the transaction disclosures, error resolution, etc.
If, however, the access to the line is via the checking account first (creation of an overdraft that is cured by transfer from the equity line), issuance and transactions will come under Reg. E. Reg. Z will govern the transfers from the equity line to the checking account, and you'll still have all of your required disclosures under Z for statements, etc.
First published on BankersOnline.com 12/16/2002
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