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#1359364 - 03/17/10 08:07 PM Open-End Floor
Jan94 Offline
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Joined: Mar 2001
Posts: 828
USA
I thought I had read a post on this sometime ago but not finding it. Our personal revolving line of credit is showing a rate of 5.25% (prime + a margin of 2). There is a floor disclosed of 7.5%. My undertanding is that we are not required to disclose a floor however I'm told that the floor is "hard-coded" into the agreement. So the agreement provides that the APR would never be lower than 7.5%, which would not be correct. As this appears to be to the benefit of the customer, are there any "violations" in disclosing this way? Thank you.

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Lending Compliance
#1359595 - 03/18/10 05:27 AM Re: Open-End Floor Jan94
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 83,164
Galveston, TX
Whatever risk there may be should be addressed in a discussion with your attorney. It is not a compliance issue.
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#1359613 - 03/18/10 12:18 PM Re: Open-End Floor Jan94
SnuffytheSeal Offline
Gold Star
Joined: Oct 2009
Posts: 270
State of Confusion
Originally Posted By: Jan94
I thought I had read a post on this sometime ago but not finding it. Our personal revolving line of credit is showing a rate of 5.25% (prime + a margin of 2). There is a floor disclosed of 7.5%. My undertanding is that we are not required to disclose a floor however I'm told that the floor is "hard-coded" into the agreement. So the agreement provides that the APR would never be lower than 7.5%, which would not be correct. As this appears to be to the benefit of the customer, are there any "violations" in disclosing this way? Thank you.


First thing I would check - what does your Credit Agreement say about Change in Terms? Our Equity Agreement states that we can not make any changes adverse to the borrower without their written permission. At the same time it says that we CAN make any changes that are in the borrowers benefit without their okay - which I think would apply here.
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