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#1987770 - 01/09/15 10:05 PM ECOA and HELOCs
Anonymous
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Do we collect ECOA information for HELOCs when the purpose is Home Improvement? We do not report HELOCs on our LAR.

Do we collect ECOA information for HELOCs when the purpose is a purchase of a new primary residence?

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#1987787 - 01/09/15 10:43 PM Re: ECOA and HELOCs Anonymous
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
1. No
2. 1002.13 Commentary: An application for an open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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#1987788 - 01/09/15 10:46 PM Re: ECOA and HELOCs Anonymous
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
1. No.

2. Yes, if you know at the time of application that is what the proceeds will be used for. See the Commentary to 1002.13(a)(5).
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1988855 - 01/15/15 02:57 PM Re: ECOA and HELOCs Anonymous
Anonymous
Unregistered

I appreciate the help gents.

So back to question two: The rules of 1002.13 apply to even if the property used as security for the line will not be the primarily residence, correct? Our software provider is insistent that property being used as collateral has to also be the property being purchased as well, or 1002.13 is not applicable. It seems like they are ignoring the definition of 'new personal residence' in the commentary.

In other words, they state: If HELOC is using collateral of property A as security for the purchase of property B, which is to be new primary residence, then 1002.13 only applies if HELOC will be secured by B as collateral, but since it is to be secured by property A, which is not being purchased since it is already owned, then 1002.13 doesn't apply.

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#1988868 - 01/15/15 03:10 PM Re: ECOA and HELOCs Anonymous
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Your vendor is correct. See 1002.13(a)(1).
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The opinions expressed are mine and they are not to be taken as legal advice.

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#1988879 - 01/15/15 03:21 PM Re: ECOA and HELOCs Anonymous
Anonymous
Unregistered

So then no ECOA is collectable in this situation then? Only If I was doing a piggyback on B would it be, correct?

I appreciate the help... over interpreting here I see.

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#1989001 - 01/15/15 05:38 PM Re: ECOA and HELOCs Anonymous
Anonymous
Unregistered

I'm sorry, but maybe I am just dense.

Here is the commentary from .13(a)(1):

5. Transactions not covered. The information-collection requirements of this section apply to applications for credit primarily for the purchase or refinancing of a dwelling that is or will become the applicant's principal residence. Therefore, applications for credit secured by the applicant's principal residence but made primarily for a purpose other than the purchase or refinancing of the principal residence (such as loans for home improvement and debt consolidation) are not subject to the information-collection requirements. An application for an open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling.

I guess I do not understand why it matters which property is being used at the collateral whether to collect the information or not, when I know that the property being purchased will be the new primary residence?

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#1989117 - 01/15/15 08:37 PM Re: ECOA and HELOCs Anonymous
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
a) Information to be requested. (1) A creditor that receives an application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, shall request as part of the application the following information regarding the applicant(s):

The dwelling that will be occupied as the principal residence must secure the loan for .13 to apply.


where the extension of credit will be secured by the dwelling,

This section would probably be clearer if it read:

where the extension of credit will be secured by the that dwelling,
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The opinions expressed are mine and they are not to be taken as legal advice.

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