Changing Credit Limit on HELOC

Question:

A current HELOC customer would like to change his authorized credit limit. He is still in his draw period. Do we have to accomplish a new note and right of rescission? Any other docs? Or could we just accomplish a Modification Agreement?

Answer:

You could simply modify the HELOC without providing any new disclosures. Many feel that adding new money doesn't pass the "smell test" and that a refinancing should be conducted. Refer to section 226.20(a) of Regulation Z.

First published on BankersOnline.com 01/19/04