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#2094534 - 08/22/16 05:03 PM Cards as Access Devices for HELOCs
Lea Scott, CRCM, CAMS Offline
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Joined: Dec 2015
Posts: 92
We are considering offering a card as an access device for new HELOCs. There seem to be two schools of thought:

1. Attach a credit card to the HELOC and it's subject to REg Z

2. Attach a debit card to a checking account that is linked to the HELOC and only allow deposits via overdrafts from the HELOC into the checking account; therefore, it's subject to Reg E.


Would like to know how other banks are approaching this and any pitfalls to be aware of for either method. Thank you.

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#2094651 - 08/23/16 01:43 AM Re: Cards as Access Devices for HELOCs Lea Scott, CRCM, CAMS
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,229
Galveston, TX
2. Is this a real DDA account or a dummy account set up by the bank for processing purposes.
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#2094658 - 08/23/16 11:36 AM Re: Cards as Access Devices for HELOCs rlcarey
Lea Scott, CRCM, CAMS Offline
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Joined: Dec 2015
Posts: 92
I would be a "real" checking account, provided with all TiSA disclosures; however, its express purpose would be to serve as a conduit for advances from the HELOC via overdraft.

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#2098786 - 09/15/16 09:46 PM Re: Cards as Access Devices for HELOCs Lea Scott, CRCM, CAMS
KMenard Offline
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Joined: Oct 2014
Posts: 77
We are looking at doing the same thing. The DDA account would be the customer's actual account just linking the HELOC for overdraft purposes but the debit card could cause the overdraft. This would be subject to Regulation E??

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#2098800 - 09/16/16 12:15 PM Re: Cards as Access Devices for HELOCs Lea Scott, CRCM, CAMS
Skittles Offline
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Skittles
Joined: Sep 2002
Posts: 13,965
TN
Regulation Z would apply if the card directly accesses the HELOC, but in this case it appears the card accesses the DDA account which in turn accesses the HELOC. These transactions would be subject to Reg E and not Reg Z.
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#2098823 - 09/16/16 02:15 PM Re: Cards as Access Devices for HELOCs Lea Scott, CRCM, CAMS
KMenard Offline
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Joined: Oct 2014
Posts: 77
Thanks for the information. One more question, if the customer already has the checking and has received the Reg E disclosures would we reissue the Reg E disclosures at the time the HELOC is made?

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#2099202 - 09/19/16 07:06 PM Re: Cards as Access Devices for HELOCs Lea Scott, CRCM, CAMS
John Burnett Offline
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John Burnett
Joined: Oct 2000
Posts: 40,086
Cape Cod
Not unless you feel a compelling need to. The HELOC isn't subject to Regulation E, and the overdraft protection transfers would not be either.
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