Here is my situation. We have instances when a consumer has a 2nd position HELOC, and a 1st mortgage. The consumer decides to refi 1st with cash out, so what we have been doing is a subordination and reducing are heloc available creidt to make up for the increase in equity. We have been supplying a letter to borrower letting them knwo what has taken place. Shoudl we be doing a change in terms and if so would it be okay under reg z

The bank cannot unilaterally change the terms- the customer must agree to it. Along with the refinance documents on the first, you should obtain an agreement from the customer to reduce their credit limit.

Al