Post-maturity rate reduction on a HELOC ok?

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Question:

We have a HELOC that has matured, and the customer is having trouble repaying. Can we do a workout agreement on it (reduce the variable rate interest to thereby reduce the payment and give them a breather)?

Answer:

No. Open-end loans are covered by different rules than closed-end loans. Workout provisions are covered by 1026.20(a)(4), but that entire section only applies to closed-end loans. HELOC changes are covered by 1026.9, and are very limited, even for rate reductions. The loan has matured, and as I like to say, it has turned into a pumpkin. No further modification can be made to it. The only options now are to do a brand new HELOC (subject to all Reg Z requirements); follow default provisions; or do a temporary forbearance agreement.
All this just to reduce the HELOC rate on a troubled line? Yep.