Please help - our consumer lending area is looking to send out a Change in Terms notice to all existing HELOC customers to inform them that their minimum draw amount will be changing. I believe their is a required number of days that we must give to the borrowers before the change becomes effective but I cannot put my finger on it.
I fear they are going to send out the letters without a defined timeframe (ex:effective immediatly) without waiting to hear back from compliance. Any guidance would be helpful. Thanks

I'd take a look at:

Part 1026 — Truth in Lending (Regulation Z)

Subpart B—Open-end Credit
§ 1026.9 Subsequent disclosure requirements.


This should have a section on Change In Terms and the notice requirements.

Does your contract allow for such changes? If you haven't contracted for it, I don't think you can initiate a change.

Increasing the minimum draw would be a detrimental change in the plan for the consumer. Unless the borrower expressively agrees to this change in writing you cannot implement the change nor can you suspend or terminate their account for refusing to agree to the change in terms.

You also cannot institute the change by "default". By this I mean you can't say that the change will automatically go into effect if the consumer does not respond within a certain time. Again they must expressively agree to it in writing.