I have gotten conflicting information from my compliance resources regarding whether or not you can increase the credit limit on a HELOC through a note/deed modification as opposed to having to do a new HELOC with new note/deed. We operate in GA, NC and TN and I understand that there may be state specific rules to deal with, but wondering if anyone is aware whether Reg Z would require you to do a new loan or what disclosures would be required to the borrower if you CAN do a modification? There will be fees involved either direction we go.

Thanks!

As long as the HELOC has not matured you and your borrower can modify the terms that are mutually agreed on without having to provide new disclosures. In the case of a limit increase you would have to provide rescission.

If the HELOC has matured then you must treat it as a new plan and provide all new disclosures.

I agree with Dan. In fact, Model Form G-7 is the rescission form for increasing an open end line.