HELOC Tied to ODP

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Question:

Can a home equity line of credit be set up contractually to also be used as overdraft protection (i.e., an automatic sweep from the line to cover any overdraft that may occur in the customer's checking account)?

Answer:

Yes, I see them often. If the customer has both a OD line and a HELOC, turn off the OD Line so that it doesn't cover OD's until the HELOC is fully advanced.

First published on BankersOnline.com 2/2/04