[jsevers]

We are looking to introduce a HELOC carve out product. Would the carve out portion be subject to TRID? We are thinking no as it would not be a new extension of credit and just modification needs to accompany the HELOC agreement. Is there any guidance that I can look at for assistance?

[rcooper]

I am not aware of any specific guidance on HELOC carve-outs or hybrid HELOCs. If a HE loan is the original transaction or if you are refinancing into a closed end HE loan TRID would apply. If this is a modification and not a new transaction I don’t believe it would trigger TRID. (My understanding of these products is that the HELOC available balance increases as the fixed-rate carve-out portion is paid down, so it is still part of the HELOC even though part of is fixed for a term).

I’d suggest reviewing the HELOC requirements in Regulation Z, 1026.40, (and also consider consulting an attorney) before implementing to ensure you meet all requirements of modifying the HELOCs. You may also want to consult with your examiner to get their opinion since they will be the one reviewing your files.

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