[Sandy]

Our Bank does not do revolving Home Equity loans. We have a borrower that does not have any debt owed on his primary dwelling. He wants to take out a line of credit against his home for when he needs money available for consumer reasons. Can we do a TRID consumer home loan Draw down line of credit for this per regulations? It would not be revolving.

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[Kimberly Boatwright, CAMS, CRCM]

Yes, you can potentially do this as a TRID closed-end consumer loan, assuming the loan is structured as a true closed-end transaction.

TRID applies to closed-end consumer credit secured by a dwelling. It is not limited to purchase, refinance, or construction loans. So the fact that the borrower wants the funds available for general consumer purposes does not, by itself, prevent the loan from being subject to TRID.

Since you are saying this would not be revolving, the bank could structure the loan as a closed-end draw-down loan. The important part is that the borrower does not get a credit balance that becomes available again as principal is repaid.

For example, if the bank approves $50,000 and allows the borrower to take the $50,000 in advances as needed, that can be structured as a closed-end loan. Once the borrower repays principal, that amount would not become available for another draw.

So, based on what you have described, I don’t see a TRID issue simply because the purpose is to have funds available for future consumer needs or because the borrower currently has no debt on the home. I would just make sure the loan documents and the way the product operates clearly establish that this is a closed-end, non-revolving loan rather than an open-end home equity line of credit.

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