Our bank offers a discounted rate on a HELOC if the customer has an existing deposit account relationship with the bank. If a new customer (w/ no existing deposit account relationship) applies for a HELOC and we offer the customer to open a deposit account with a mininium amount to be maintained for a specified period of time so that the discounted rate can apply, are there any regulatory issues involved with this arrangement? Any disclosure requirements? Would this set-up fall under the anti-tying regulations?

Not a problem.

Review Reg Y for the traditional bank product exemption from anti-tying rules.

Just a word of caution. Reg E prohibits you requiring the loan customer from auto-debiting their loan payments from a deposit account.

Specifically, the Commentary to Section 205.10(e)(1) states:

Loan payments. Creditors may not require repayment of loans by electronic means on a preauthorized, recurring basis. A creditor may offer a program with a reduced annual percentage rate or other cost-related incentive for an automatic repayment feature, provided the program with the automatic payment feature is not the only loan program offered by the creditor for the type of credit involved.