HELOC Disclosures

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Question:

We are an FDIC regulated bank and are considering starting to offer HELOCs. What are the required disclosures and are there good "cheat sheets" you could recommend? I am fairly new to compliance and would appreciate some help in understanding this product.

Answer:

Home Equity Line Of Credit:
Application disclosure requirements are found in Section 226.5b;
Initial disclosure requirements are found in Section 226.6;
Periodic statement requirements are found in Section 226.7.

“When your home is on the line” booklet - must be provided at the time an application is provided to the consumer.
Initial program disclosure - must be provided at the time an application is provided to the consumer.
Note - different from standard Truth in Lending disclosures (see next page).
If the bank follows these rules correctly, the bank does not have to comply with the requirements of RESPA.
Still provide:
a) Right of Rescission Notice;
b) Standard Flood Hazard Determination Form; and
c) Appraisal disclosure or copy of appraisal.
Collection of government monitoring information:
- Non-HMDA banks - Do not collect.
- HMDA banks - May optionally collect if some of the proceeds are using for home improvement[Section V.A.5. code 2 of Appendix A of Regulation C].

First published on BankersOnline.com 11/1/04