Can a consumer make a draw on a HELOC to pay interest that is due? Is this recapitalization of interest? Didn't sound quite right so I wanted to get another opinion. Thank you.

As long as the consumer is the one doing it and not the bank, I see no problem.

Anyone else?

Our customers do it all the time. They can take a draw for ANY purpose. Some lenders even encourage it. Our interest on our HELOC loans add on to the principle automatically and the payments are 2% of the principle balance, that go to principle.

Ok, so this would be disclosed on the HELOC statement as a "finance charge"? (Brody - forgot to log in)