Answer:
If you are converting this to a closed-end credit you must treat it as a refinance and provide all the required closed-end credit disclosures. See the Commentary to 226.5b(5).
First published on BankersOnline.com 11/21/11
HELOC: Converting to Fixed P & I Payment
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Question:
HELOC Question: The funds were 100% disbursed within the first 6 months of the 5 year draw period. The borrower wants to convert this to fixed P & I payment before the end of that 5 year period. What would be the appropriate course of action? Would we need to go thru full refinance or can we just use the modification agreement? His HELOC agreement is written for a 5 years draw period and 10 years fixed interest P & I re-payment period.
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