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#2280570 - 02/02/23 05:16 PM HELOC renewal
Anonymous
Unregistered

I have read 1026.40 and 1026.9. I cannot determine if a renewal of a home equity LOC is considered a change in terms (none of the terms are changing, they just have access to the LOC for 5 more years. Can someone point me in the right direction?

On a similar note, if we decide not to renew the LOC, is this a change in terms? I am assuming not because it was disclosed at the time the HELOC was opened. However, if a few renewals have occurred and now we've decided not to renew-- is that a change in terms?

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#2280575 - 02/02/23 06:39 PM Re: HELOC renewal Anonymous
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,694
Illinois
When a HELOC is approaching maturity, the customer can refinance it if they qualify to continue to have access to the line, or there may be a baloon payment under the terms of the original note if they attempt to refinance it and don't qualify.

With a refinance you are providing a new note and a new TILA disclosure. With a balloon payment, you follow the terms of the original note.

Neither of these are change in terms.
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#2280613 - 02/03/23 04:49 PM Re: HELOC renewal Anonymous
Anonymous
Unregistered

We don't make them refinance. We have a 5 year draw period that can be renewed for another 5 year period. No refi necessary. So no new TILA disclosures are provided because it does not replace the existing obligation but rather allows them to continue to use it as a LOC instead of entering the fixed repayment period.

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#2280616 - 02/03/23 05:01 PM Re: HELOC renewal Anonymous
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,694
Illinois
If the note gives the consumer the option to renew, then you are still operating under the terms of the original note so that is not a change in terms.

If the bank chooses not to renew, then you owe the consumer an adverse action notice.
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#2280628 - 02/03/23 06:37 PM Re: HELOC renewal Anonymous
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
It really comes down to what your original HELOC contract actually sets forth. Otherwise, we are guessing. Talk to your legal counsel.
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