Washington, D.C. — The Office of Thrift Supervision (OTS) and the FDIC have issued guidelines to regulated financial institutions about managing programs offering Home Equity Lines of Credit, a revolving form of credit in which the borrower’s home serves as collateral.

The lenders have begun systematically shutting down the Home Equity Lines of Credit (HELOC) for millions of homeowners. While the lenders have the right to reduce, suspend, or even terminate these lines of credit in which the home serves as colateral, they can not do it in rogue fashion.
There are consumer protection laws in place that must be followed, even though they tend to favor the lender. The laws state that the lender is required to reinstate the line of credit when the reason that it was reduced in the first place no longer exists.

Under Regulation Z, which implements the Truth in Lending Act, lenders are generally prohibited from closing a credit line and accelerating repayment of the outstanding balance. The main exceptions are when the borrower committed fraud or made material misrepresentations to obtain the loan, or when the borrower fails to repay the line as promised. Those two exceptions to Regulation Z are obvious and straightforward. Lie to get the loan or miss a couple of payments, and the line of credit can be yanked.

If you learn that the terms and conditions of your equity line are about to change, make sure that your lender is in full compliance with the laws. And remind your lender of the recent suggestion from the FDIC, which urged institutions "to work with borrowers to minimize hardships that may result" from any reductions or suspensions of your loan.


Read More Here:
http://www.heraldtribune.com/article/20080921/ARTICLE/809210305

http://files.ots.treas.gov/481121.pdf

http://www.fdic.gov/news/news/financial/2008/fil08058a.html

__________________
Moe Bedard
Founder & President

Loan Safe Solutions - Forensic Loan Document Reviews & Loan Modification Processing
(951) 531-0148 ext. 267 Telephone
(800) 801-7979 Fax

The comments, posts, threads and material on this websites are NOT to be taken as legal advice and we highly recommend that anyone facing foreclosure or that believes they are victims of predatory lending should seek the counsel of an attorney and or an accountant. ALWAYS obtain a second and third opinion on your particular situation from a trusted source. We will not be held liable for any material, comments, posts, threads, emails or any communication made while your visit PredatoryLendingLaw.org. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of our employers, other ventures or any individual attorney. No advice or information, whether oral or written, obtained by you or through or from this website or forum shall create any kind of promise or business relationship. PLEASE READ OUR LEGAL & PRIVACY POLICY HERE