Bank wants to do fixed rate HELOC but does not have a plan disclosure. They think they can just use variable and have both the floor and ceiling be the same rate thinking this would be the same result. I'm not sure I agree and recall reading something about this being "deceptive" and passing it off as something that it is not? I'm reading through Reg Z and haven't come across anything that might prohibit this, but would appreciate any thoughts on whether this is good practice? Thanks!

Depending on how your disclosure is set up, it may still reference indexes the rates would be tied to. But usually disclosures for variable rate plans have an extra section that is not needed for fixed rates (TIL).

Per the commentary to reg z section 226.5(a)(1)(4): "A creditor may provide a single disclosure form for all of its home equity plans, as long as the disclosure describes all aspects of the plans." So if you have both a fixed rate plan and a variable rate plan on one disclosure you would need a section dedicated to the required disclosures of each plan that are different. The disclosure you have described would not meet the requirements of Reg. Z.

That's what I also determined. Thank you both for your input.

I'm doing a follow up on this and would appreciate any thoughts. The bank has decided to ahead with offering a ceiling and floor on a variable rate HELOC plan until the fixed rate plans are available. We credit score all our consumer loans and use risk-based pricing. I may be just borrowing trouble but I'm concerned that this "arrangement" may not be offered to everyone, but maybe that's ok? Could there be anything here to consider or am I just overthinking this? Thanks!

All HELOCs, or any variable rate loan secured by a dwelling, should have a ceiling (maximum rate) disclosed. See 226.30 and its Commentary.

Different floor rates constitute separate plans and would require separate disclosures.

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may be just borrowing trouble but I'm concerned that this "arrangement" may not be offered to everyone, but maybe that's OK?

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No, that's not OK. It should be offered to all applicants that qualify for it.

The different floor will affect the historical example of the plan.

From 226.5b(d)(12)

(xi) An historical example, based on a $10,000 extension of credit, illustrating how annual percentage rates and payments would have been affected by index value changes implemented according to the terms of the plan. The historical example shall be based on the most recent 15 years of index values (selected for the same time period each year) and shall reflect all significant plan terms, such as negative amortization, rate carryover, rate discounts, and rate and payment limitations, that would have been affected by the index movement during the period.

Rather than having to create a brand new disclosure, would it be acceptable to have an addendum to the disclosure stating the ceiling and floor?

Look to 226.5b and its Commentary for the notice requirements, but off the top of my head I think an addendum would suffice as long as it included the appropriate historical example.