tailieunhanh - HOME EQUITY LINE OF CREDIT ACCOUNT MANAGEMENT GUIDANCE

designated circumstances exist, and the regulatory commentary emphasizes that credit privileges must be timely reinstated when those circumstances One way that an association can meet this responsibility is by monitoring an affected line of credit frequently enough to assure itself that the condition permitting the suspension or reduction continues to Alternatively, an association may require borrowers to request reinstatement of credit When a consumer requests such reinstatement, the association must promptly determine whether the condition allowing the suspension remains in In doing so, an association may charge the consumer bona fide, reasonable fees for services actually. | HOME EQUITY LINE OF CREDIT ACCOUNT MANAGEMENT GUIDANCE A home equity line of credit HELOC is a form of revolving credit in which the borrower s home serves as collateral. With a HELOC an applicant will be approved for a specific amount of credit that can be Since HELOCs often have long-term or interest-only payment features OTS expects associations to actively manage their home equity portfolios. To do so associations should Maintain effective risk management systems as explained in the 2005 Credit Risk Management Guidance for Home Equity Lending2 2005 HELOC Guidance and Comply with the OTS real estate lending standards rule3 and related guidance. The goal of managing credit risk is important from a safety and soundness perspective. Therefore associations often structure HELOC plans so that the available credit limit can be reduced suspended or terminated. When taking such actions associations must follow the federal laws and rules designed to protect HELOC customers. OTS will review associations HELOC account management policies and practices to ensure compliance with these requirements which are explained below. TERMINATING REDUCING OR SUSPENDING A HELOC LEGAL RISKS Truth in Lending Act TILA Regulation Z Regulation Z which implements TILA sets forth the circumstances under which a HELOC 4 can be terminated suspended or Savings associations are responsible under Regulation Z for timely reinstatement of lines of credit which cease to meet the criteria for suspension or reduction. These requirements are discussed in the following sections. Termination of Line Demand of Full Repayment With limited exceptions Regulation Z prohibits creditors from terminating a HELOC and accelerating repayment of the outstanding balance before the scheduled expiration of the 1 2 3 4 5 For more information about HELOC s see The Federal Reserve Board What You Should Know About Home Equity Lines of Credit June 12 2007 available at http Pubs .