Without research, I believe you are correct. The lien status is required on a first lien for the "loan in any amount" exception. You also have use requirements and a cap on the insider loans in aggregate.
Here is an excerpt from the ABA Reg. O manual to support what you have said.
General Prohibitions And Restrictions For example, assume a bank with $10 million in unimpaired capital and unimpaired surplus grants a $150,000 home equity line of credit to an executive officer, secured by a first lien on the executive officer’s residence. Obviously, the bank does not wish to count this line of credit toward the more restrictive $100,000 (based on the bank’s unimpaired capital and unimpaired surplus) lending limitation as this line alone exceeds that limitation. In order that this line not be counted toward the $100,000 limitation, the bank must ensure that, as a term of the written home equity line of credit agreement, the executive officer is permitted to use this line only for the purposes of purchasing, constructing, maintaining and/or improving his or her residence.
The FDIC has even taken the position in a private letter ruling issued in 1995 that credit extensions for home purposes not counted toward the more restrictive lending limitation should be separately documented and not combined with a loan for another purpose. As evidenced in the immediately following discussion on Federal Reserve Board guidance on refinancings with additional funds, the Federal Reserve Board does not seem as adamant that separate documentation be maintained.
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AndyZ CRCM
My opinions are not necessarily my employers.
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