We are a Virginia state-chartered member bank proposing to make loans in Maryland. Section 12-903(a)(2) of Maryland Code prohibits a balloon payment at maturity on consumer revolving credit: "The repayment terms for a [revolving] plan extended to a consumer borrower may not include a provision under which the consumer borrower may be required to pay a balloon payment at maturity."

When making HELOCs, personal lines of credit or revolving overdraft accounts to consumers, how do Maryland banks avoid the potential for a balloon at maturity? All I can think of is amortizing LOC's but that kinda defeats the purpose of having a revolving account. Another alternative is no maturity date, but does Maryland Code actually envision a Bank making a revolving loan ad infinitum?

Thanks for any input and suggestions.

MarkB

Our HELOCs have a 10 year revolving term followed by a 10 year amortization term.