Deceased Borrower on HELOC

What is the appropriate action to take on an open-end line such as a credit card or HELOC when the sole borrower dies? We want to block access to the line so someone else can't make draws on the account. Does this require adverse action per Reg B? Is it covered by Reg Z under 226.5b(f)(3) that would allow us to block the account based on the borrower being unble to repay the obligation?

Thanks

Read your 'default' definitions and when you can cease making advances. Your answer should be in there.

DS, is correct. First, refer to your contract. Also, the HELOC rules in Reg. Z does allow for termination and acceleration in this instance.

Paragraph 5b(f)(2)(iii)

2. Examples. A creditor may terminate and accelerate, for example, if:

• The sole consumer obligated on the plan dies

On a similar note....we have a HELOC account in the name of husband & wife.....it has matured and we are going to renew the line for another 3 yrs, BUT the husband died a few months ago.

Can we simply do a modification of mortgage, extending the maturity date and removing the husband and also do a new note, extending the maturity date and removing the husband?

Or, would you recommend closing the existing HELOC, statisfying the mortgage and doing a whole new loan? It's more expensive this way and we were going to pay closing costs, so we weren't planning to do it that way.

Your advice?

Thanks everyone. What type of written notice would be appropriate? We'll check the contract, but if it doesn't consider death as a default of the contract does our notice need to treated as adverse action under Reg B?

Who would you send the adverse action to?

We would send it to the address of the deceased assuming that whoever is handling the will/estate/debts/etc would be the one who handles it.

If the HELOC is matured - you have to start over with early disclosures, RofR, the whole works.

Rather than doing a whole new loan (more costly)....can we do a new note, a mortgage modification and ROR? We've already given new HELOC early disclosures.