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#294952 - 12/29/04 04:31 PM HELOC
Jim Offline
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Joined: May 2004
Posts: 127
New York State
Does anyone use a card for the customer to access their line of credit? If so what are the additional disclosures. We already provide a Reg E disclousre for error resolution.

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#294953 - 12/29/04 04:37 PM Re: HELOC
rlcarey Online
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rlcarey
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Galveston, TX
Providing the Reg E disclosure is the wrong approach. A card that accesses a HELOC is a credit card and would be governed under the Reg Z error resolution procedures. As far as disclosures, the use of the access device would have to be described in your loan agreement, along with any special charges or provisions.
Last edited by rlcarey; 12/29/04 04:45 PM.
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#294954 - 12/29/04 04:44 PM Re: HELOC
Jim Offline
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Joined: May 2004
Posts: 127
New York State
Thanks, an Error Resolution is given, I incorrectly described the disclosure. You have reenforced my feeling on disclousres in that it isn't a big deal.

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#294955 - 12/29/04 09:13 PM Re: HELOC
Suzie Offline
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Suzie
Joined: Apr 2002
Posts: 662
Far North
Not to steal your thread but I too have HELOC concern.

We are looking at issuing a HELOC card that functions like a consumer debit card except that the default POS/purchase account is a line of credit rather than a DDA.

The face of this card will indicate Debit Card.

Since advances are against the LOC, Reg Z applies.

Are others labeling such a card as debit card rather than credit card?
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#294956 - 12/29/04 09:32 PM Re: HELOC
SteveG Offline
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Joined: Jul 2001
Posts: 58
Also note that there may be some states that prohibit the use of plastic for accessing HELOC's (the prohibition is contained in the statute that creates a safe harbor for lien priorty of advances).

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#294957 - 12/29/04 11:25 PM Re: HELOC
Suzie Offline
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Suzie
Joined: Apr 2002
Posts: 662
Far North
Bump - Bump

Is it acceptable to label plastic that accesses a HELOC directly a debit card?

Am I wrong in thinking a debit card must be tied to DDA?

Since we will be accessing the LOC directly, don't we have to call the card a credit card?

The card stock is on order and I think we have made a mistake!!
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#294958 - 12/29/04 11:44 PM Re: HELOC
rlcarey Online
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rlcarey
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Galveston, TX
I think that this is an issue that needs to be discussed with the card issuer and whether they have a problem with issuing debit cards on credit accounts. The protections they offer the consumer may be different and you may be limited on certain processes that you attempt. There is nothing in the reguations that would address this. They would however be considered credit cards and governed under Regulation Z and not Regulation E.
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#294959 - 12/30/04 12:09 AM Re: HELOC
Suzie Offline
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Suzie
Joined: Apr 2002
Posts: 662
Far North
Thanks rlcarey.

Apparently MasterCard does not have a problem with issuing a debit card on a credit account or so I'm being told.

Does not seem fair to the consumer though, to label something a debit card when it is a credit card.
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#294960 - 12/30/04 12:22 AM Re: HELOC
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,025
Bloomington, IN
Quote:

Does not seem fair to the consumer though, to label something a debit card when it is a credit card.




I agree. Some banks run their HELOCs through their DDA system as a "dummy" DDA account for accounting and processing of the HELOC account. This is why some banks think that they are actually issuing a debit card instead of a credit card. But as Randy said, these are credit cards regardless of what the bank calls them or how they process them.
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