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#633303 - 11/02/06 04:17 PM HELOC loans access with debit card
boasm Offline
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Joined: May 2002
Posts: 21
We want to provide an access card to our HELOC customers. This card would be used like a debit card that can be used anywhere. It can be processed as a debit or credit. It would directly debit their credit line. It won't go through a deposit account. Would this be considered a credit card or a debit card or debit/credit card? If a debit card do we provide a REG E disclosure? If a credit card, we would not want to use our regular credit card disclosure since none of that information applies. All of the disclosures for the HELOC is in the HELOC documents including the Billing Error Notice. Would we need to provide any additional disclosures for this type of access card? Can this type of access card be legally used? Open to your suggestions.

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#633304 - 11/02/06 07:02 PM Re: HELOC loans access with debit card
GuitarDude Offline
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So Cal
IMO, this would essentially be a secured credit card. It would not be covered by Reg E (again IMO) because Reg E defines an account as a DDA, savings, or other asset account. A credit plan is a liability, not an asset.

Lastly, some groups don't look too positively on these types of products because it can be seen as placing a customer's dwelling in unnecessary jeopardy. Some might ask why a bank would let a customer use their home as security for the purchase of a DVD/cup of coffee/other non-essential or trivial item.

These are just my opinions, FWIW.
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#633305 - 11/02/06 09:38 PM Re: HELOC loans access with debit card
CRAatBOK Offline

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Further South than I wanna be.
I think you need to move this to the lending forum
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#633306 - 11/02/06 09:55 PM Re: HELOC loans access with debit card
Comply 101 Offline
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Comply 101
Joined: Jul 2001
Posts: 708
One word or caution, don't allow your card, if Visa, to participate in a PIN based pos functionality. That is a violation of Visa Regulation Section 3.2C1.a bullet 4. Issuer must not allow a Visa card, that is used primarily to access a line of credit, to participate in any pin-based debit program, unless participation is for ATM access only.
When setting your card up, think of it as another access device, like a check.
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#633307 - 11/03/06 02:17 PM Re: HELOC loans access with debit card
Pale Rider Offline
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under the Lone Star
You might want to ask in your state forum as well. This activity would not be legal in Texas.
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#633308 - 11/03/06 02:25 PM Re: HELOC loans access with debit card
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,958
Bloomington, IN
Quote:

IMO, this would essentially be a secured credit card.




That is 100% correct. And all applicable Reg. Z disclosures and requirements would come into play. Including any billing disputes.
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The opinions expressed are mine and they are not to be taken as legal advice.

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