10% Fee on Every Draw from a HELOC

Answered by:

Question:

If a lender has disclosed that they will charge a 10% fee on every draw made from a HELOC, can the 10% be subtracted from the actual draw amount (only 90% given to borrower, 10% forwarded to lender as fee payment) or does the 10% have to be opened as a separate receivable?

Answer:

I have never heard of this and I can't believe that it is true question from a legitimate source. The 10% fee would have to be included in the APR calculation on the periodic statement which would result in an astronomical APR which would most likely subject any lender doing this to immediate predatory lending enforcement.

First published on BankersOnline.com 10/30/06