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Controlling Disbursements by Monitoring Work HELOC

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Question: 
We have approved a HELOC to be used for the construction of an addition to the home. Can we control the disbursements by monitoring work completed by a third party inspector? Also may a fee be charged for those inspections?
Answer: 

Not unless you had a legal addendum drawn up and made a part of the contract and then I would even question that. Reg. Z 1026.40 has specific prohibitions on restricting or suspending advances on a HELOC.

These are the issues you run into when you use a legal agreement for something other than what it is intended to be used for.

First published on 11/03/2014

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