Home Equity

Posted By: Ann

Home Equity - 07/24/01 11:05 PM

We have a customer who wants a home equity
loan to pay off some business debts. Management doesn't feel we need a written
application from the customer, like you would need if home improve or purchase type loan.
I understand the rules are they customer completes a written application, this to me is just like a purchase etc.
Can someone direct me to where this is located so I will have reg to back up the application or am I confusing a home equity
with other type home loan info.
Thanks
Posted By: Tom S

Re: Home Equity - 07/25/01 12:23 PM

Section 202.5(e) of Reg B requires written applications for loans that are secured by and for the purchase or refinance of a 1-4 family principal dwelling. I am not aware of any other requirements for written applications. It sounds like in your case a written application is not required.
Posted By: John Burnett

Re: Home Equity - 07/25/01 01:56 PM

And the Recordkeeping Requirement in 31 CFR 103.33(a) won't apply because the loan will be secured by an interest in real estate. This is the so-called "purpose statement."
Posted By: Ann

Re: Home Equity - 07/27/01 12:15 AM

Thanks to both Tom & John for your input.
Where I read this is in the Texas Constitution( we are in Texas ) where the rules listings are for the Home Equity/Home Improvement in 1998 when this all came into action. In it is where there use the term "written Application" and a side note to a seminar I went to back then said it superceded Reg B. However, things could change an since I understood we would not be doing Home Equity I haven't kept up with changes. I dont have the exact section as I'm at home but if this is sounds at all
familar I can get the exact location tomorrow.
Thanks again for all the help.