Good afternoon,

The bank would like to start charging an annual fee on existing unsecured lines of credit. Am I correct in thinking that as long as we provide advance notice of the new fee, we have a green light to add this fee to existing accounts?

Since this would fall under a significant change, make sure you handle anyone that rejects the change correctly.

Can you provide me more information on this or a reference to a regulation? I don't understand your comment and would like to research.

Thanks!

Refer to 1026.9(c) and (h).

Perfect! Thank you. So looking a 1026.9 (h) I am gathering that the consumer right to reject would not apply since 1026.9(h)
applies when 1026.9(c)(2)(iv)(B) requires the disclosure of the consumer's right to reject. Since 1026.9(c)(2)(iv)(B) seems to only apply to credit cards, and this is an unsecured line of credit I think I am good. Am I reading this correctly? I really do appreciate your help and have another question regarding reducing available credit on unsecured lines up my sleeve to run by you......

What language in your agreement gives you the right to make a change like this? There are two parties in the agreement. Can your consumer send you a notice that he now deserves a lower rate and the bank has to do that? Certainly not. The borrower has to have agreed to changes or receive some consideration for doing so, just as the bank would to agree to a lower rate. You have a binding contract and changes must be controlled in some manner. It should allow for some notice and likely your states requirements and laws require either that they accept the change or can reject it and can payout the agreement in a specified plan. Otherwise the bank adds a fee and the option is to accept it or the bank will call the loan. That won't go over well with anyone.

Andy Z thank you for your input. I am looking into all of this at the moment and appreciate the feedback.