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#20543 - 06/12/02 04:12 PM Home Equity Line
MAG Offline
100 Club
Joined: Apr 2002
Posts: 101
I'm working on a disclosure for a home equity line of credit that will require monthly principal payments based on a percentage of the current outstanding balance and there is no maturity date on the loan. Does anyone know if there is a payment calculator online that can calculate the minimum monthly payments for the historical example? Also, is there any problem with no maturity date on the loan?

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Lending Compliance
#20544 - 06/12/02 06:41 PM Re: Home Equity Line
Anonymous
Unregistered

As I understand it, if your HELOC is evergreen (no maturity date), you may not close the account except for the reasons cited in Reg. Z.

If you do include a maturity date, remember that Reg. Z requires full redisclosure if the line is renewed at the maturity date. To avoid this, you might want to include language in your disclosure that indicates that the renewal will occur prior to the maturity date.

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#20545 - 06/12/02 09:54 PM Re: Home Equity Line
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,907
Galveston, TX
Boy - no maturity date. I thought that the regulators said a long time ago that banks should not be entering into Home Equity Lines with no maturity dates (Evergreen Accounts). The thing is that you can never change the terms on these accounts and you are going to be locked into servicing these accounts as they currently exist FOREVER. If you have one customer that lives in his house for 60 years, your ancestors will be trying to figure out how to convert this account to a new system in 2062.
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#20546 - 06/18/02 09:02 PM Home Equity Line
elcinoca Offline
Platinum Poster
Joined: Jan 2002
Posts: 537
Elizabeth City, NC
MAG,

With respect to "no maturity," check your state's law. Our state law imposes a statutory maturity even if one is not stated in the deed of trust or equity agreement.

Mark B

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#20547 - 06/19/02 03:00 AM Re: Home Equity Line
Richard Insley Offline
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Richard Insley
Joined: Oct 2000
Posts: 10,191
Toano, VA
rlcarey is exactly right. Anyone who has ever bought a HELOC portfolio knows what a huge headache you get trying to find a way to service oddball terms and conditions.
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