HELOCs and Reg B

Question: Does Regulation B require us to collect monitoring data on home equity lines of credit if we do not report HELOCs on HMDA? Does a HELOC become a refinancing under Regulation B for this purpose?

Answer: Regulation B requires the collection of monitoring data on loans to purchase or refinance a primary dwelling. Other transactions are not covered. Informally, the FRB has explained that most HELOCs don't trigger data reporting because they do not refinance an existing loan. To meet Regulation B's monitoring data refinancing test, the loan must replace an existing loan that was to purchase or refinance the purchase of the dwelling. You are free to presume that a HELOC does not meet this test unless you have specific information to the contrary. For example, the customer may tell you that the purpose is to pay off a maturing HELOC that was used in a purchase transaction. In this situation, the HELOC would be subject to Regulation B's monitoring data collection.

Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 8, No. 16, 1/04