3 Day Rule: Converting HELOC Into HE Loan

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Question:

What is the 3-day rule when a HELOC is being converted into a HE loan? I'm in Operations and we have problems when a loan officer starts a Presentation without including us and then sends us the information about a month later. Do we concern ourselves about not getting the information early enough to send the preliminary disclosures within the 3 days? This is an ongoing problem that we would like to settle once and for all.

Answer:

Converting a HELOC to a closed-end HE is a refinancing and you must follow all the closed-end disclosure rules from the date of the application/request to convert the loan which includes Regulation X § 1024.7, and Regulation Z §§ 1026.19(a), 1026.19(b) if a closed-end variable rate loan, 1026.32, .35 and .43, flood requirements, HMDA, etc. ..... I think you can see where I'm going.

If no GFE was provided then you will have to run your comparison chart with $0 in the GFE column and the actual charges in the HUD column and make the applicable cures. Based on your comments I would venture a guess you may have several cures that need to be made, and you could also have possible Reg. Z violations if proper Reg. Z disclosures were not made.