Customers are requesting reinstatement of credit privileges on HELOCs frozen due to a decline in colleral value. Staff Interpretations, Comment 4 on 226.5b(f)(3)(vi) states:
"Once the consumer requests reinstatement, the credit must promptly investigate to determine whether the condition allowing the freeze continues to exist."
Does anyone have an objection to "removing" this condition by reducing the credit limit, so that the new LTV meets loan policy/product requirements, and therefore the line can be unfrozen? We'd offer this to the customer as a possible solution, and do a change in terms if they accept.