One of our customers wants to initiate an ACH debit transfer from his HELOC to make a monthly payment to his son's college. Can I do this in the first place?
If I can, what are the possible issues that I need to think of? Is this kind of a transfer governed by NACHA rules....does Check 21 affect in any way?
Any help is appreciated.
Thanks.

If the transfer originates with your bank (holding the HELOC), it's a credit transfer to the college's account. NACHA certainly allows this type of entry. The issue, I think, is whether your systems have the ability to generate the internal debit to the HELOC and the ACH entry to the college's account.

If the transfer originates with the college, it would have to be a debit to a DDA account that feeds from the HELOC at your bank, or a debit directly to the HELOC. Both are permitted by NACHA, but you are not obliged to accept loan debit entries from the ACH. In fact, your systems may not be able to process them.

At your end, if a dummy DDA account is involved, the entries will be subject to Reg. E.

Check 21 is not involved in any aspect of these transactions.