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#1678594 - 03/16/12 02:40 PM Line of Credit secured by rental property
notuntermywatch Offline
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Customer wants a line of credit, will be secured by one of their rental properties that they own free and clear. Purpose of the loan is for downpayment in purchasing a new primary dwelling.

It's Friday and I'm overthinking, but we would just do a HELOC right (give all the standard HELOC docs)...even though the collateral is not their home but a rental property?

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#1678659 - 03/16/12 03:44 PM Re: Line of Credit secured by rental property notuntermywatch
swiggles Offline
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It's a consumer purpose loan to purchase their primary dwelling. It might depend upon your state, but here, a HELOC is a revolving line of credit secured by the borrower's homestead property. If the customer is making a down payment, why do they need a revolving line of credit?.....or a straight line of credit for that matter?
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#1678722 - 03/16/12 04:47 PM Re: Line of Credit secured by rental property notuntermywatch
Dan Persfull Online
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but we would just do a HELOC right (give all the standard HELOC docs)...even though the collateral is not their home but a rental property?

This is a consumer purpose loan therefore it's a HELOC. See the Commentary to 1026.40(1).
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#1678744 - 03/16/12 05:13 PM Re: Line of Credit secured by rental property Dan Persfull
swiggles Offline
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Originally Posted By: Dan Persfull
but we would just do a HELOC right (give all the standard HELOC docs)...even though the collateral is not their home but a rental property?

This is a consumer purpose loan therefore it's a HELOC. See the Commentary to 1026.40(1).
1026.40(l) of what?.....pardon my ignorance, please.
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#1678747 - 03/16/12 05:15 PM Re: Line of Credit secured by rental property notuntermywatch
Dan Persfull Online
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Reg. Z.
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#1678753 - 03/16/12 05:18 PM Re: Line of Credit secured by rental property notuntermywatch
RR Joker Offline
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The Swamp
Under the new Consumer Bureau numbering.
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#1678846 - 03/16/12 07:01 PM Re: Line of Credit secured by rental property notuntermywatch
swiggles Offline
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Oh geez.....I AM ignorant!
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#1678851 - 03/16/12 07:03 PM Re: Line of Credit secured by rental property notuntermywatch
swiggles Offline
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And then I got to worrying....that we're not giving proper disclosures. But when I think it through, we do not have an open-ended consumer product secured by anything BUT the consumer's PRINCIPAL dwelling....which is our HELOC product and which we give all the required disclosures.

My question still is....if the customer is borrowoing to make a down payment, why does the customer need a revolving line of credit?....just curious.
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#1678856 - 03/16/12 07:09 PM Re: Line of Credit secured by rental property notuntermywatch
Kathleen O. Blanchard Offline

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As long as they at they at least intend to maintain the line for future purposes, they can have a HELOC for this purpose.
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#1678862 - 03/16/12 07:12 PM Re: Line of Credit secured by rental property Kathleen O. Blanchard
swiggles Offline
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Originally Posted By: Kathleen B
As long as they at they at least intend to maintain the line for future purposes, they can have a HELOC for this purpose.
Yes, I realize that......and perhaps that's the reason....they just want a revolving line with the first disbursement for the down payment of a home and future disbursements for....whatever.
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